North America and Europe are two of the most popular regions for Foreign Direct Investment because of their economic and political stability. Since 2006, investment from China was on the rise, going from $25 Billion in 2006 to $94 Billion in 2016.
However, in the last two years, North America and Europe have seen a sharp decline in Chinese FDI due to the new Chinese outbound investment regulations. In addition, these new restrictive policies have altered the type of investment and investor.
Before changes to the policy were made, a handful of private Chinese investors were responsible for a significant portion of FDI mainly in real estate, hospitality, sports, and entertainment. Investment in these sectors accounted for almost 25% of all foreign investment from China.
These sectors are now restricted, and areas focused on Chinese development and infrastructure such as technology, R&D, energy, and agriculture programs have taken precedence. In addition, the private investor has been replaced by sovereign-wealth funds and other political players focused on projects such as the Belt and Road initiative.
The implications of this trend, if it continues, is concerning. From 2015 to 2016, the value of Chinese FDI in both regions increased by $53 billion. From 2016 to 2017, the value dropped by $26 billion (discounting the completion of the $43 billion Syngenta deal).
Even more troubling is the forecast for Chinese FDI. The total value of newly announced acquisitions and transactions in North America dropped by 89% and 75% respectively, and in Europe, 60% and 46% respectively.
At Aliant®, our attorneys are well-versed in policy changes and its impact on our clients. We work closely with our colleagues in China to help our Chinese and non-Chinese clients to move funds out of China to North America and Europe.
For more information on how we can assist you, please contact us today at info@aliantlaw.com