Foreign Direct Investment (FDI) in China in 2019 grew the most in two years, though outbound investment declined amid continuing Capital controls.

FDI was up 5.8% year-on-year to 941.5 billion yuan ($136.71 billion) last year, the Commerce Ministry said, the biggest rise since 2017 when it grew 7.9% in yuan terms.

China remained the second largest recipient of FDI globally, said Chinese Vice Commerce Minister Qian Keming at a news briefing on Tuesday in Beijing.

Qian Minister
Photo: Qian Keming, Chinese Vice Commerce Minister.

China’s outbound direct investment (ODI) declined 8.2% to $110.6 billion in 2019, said Qian.

The structure of ODI is more “balanced” with most flows to rental and commercial services, manufacturing, distribution and retail, he said.

China’s non-financial ODI rose just 0.3% in 2018 having dropped sharply in 2017 as authorities kept a tight grip on outflows for what they termed “irrational” overseas projects.

Qian said $15 billion of investment accounting for 13.6% of the total flowed to countries that are along the Belt & Road, China’s ambitious plan to build a modern version of the Silk Road to link China with Asia, Europe and beyond through large-scale infrastructure projects.

Investment by Chinese firms was once a significant driver of global asset prices from property to mergers and acquisitions. But it has fallen sharply since Beijing tightened capital controls in 2016.

In yuan terms, China’s total ODI declined 6% to 807.95 billion yuan in 2019.