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How Foreign Investments Impact China's Global Growth
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According to data from the World bank, China has been investing heavily internationally, having invested over $2.27 trillion (investors should note this data excludes Hong Kong and Macao, which are special administrative regions) in nations abroad between 2005 and 2015. Last year, China’s foreign direct investments soared 40% to $189 billion.
This data also shows that China made its first foreign investment, a humble $430 million, back in 1982. Since then, things have clearly changed. Rapid growth within China has led to a massive increase in demand for resources, which the country has sought to help satiate through foreign investments.
Africa
Due to China’s recent sluggish economic growth, its total foreign investments have decreased since 2013, during which it totaled $290 billion. Some of the country’s newest partnerships are with burgeoning African nations, though China’s slowdown has made African leaders express concern about its continued involvement (or possible lack thereof) in the region.
In December 2015, at the Forum on China-Africa Cooperation, President Xi responded to those concerns by offering a $60 billion to African states that would come in loans and export credits; only $5 billion would arrive as grants and interest-free loans. Hosted in Johannesburg, the summit brought together delegates from 50 African countries, the African Union, and China, and Mr. Xi told leaders that the funds would be invested in 10 projects over the course of the next three years at the time.
The Middle East
China is also notably involved throughout the Middle East. The bulk of the country’s investment in the region is in the energy sector, and this makes sense, as the Middle East is home to oil and gas-rich nations like Iraq, Oman, Qatar, and Saudi Arabia. Last January, Mr. Xi offered $55 billion worth of loans and investments to the region that capped off a high-profile trip.
China has invested in other real estate and utility ventures in the region. The country also set up a joint $10 billion investment fund in late 2015 with the United Arab Emirates as part of Beijing’s efforts to create closer commercial and political with the Middle East; the two countries hope to build new trade routes between the East and West.
One can’t leave out China’s growing tourism interests in the region, too. In 2015, the number of Chinese tourists visiting Egypt, for instance, rose considerably from 60,000 in 2014 to 135,000. It helps that there are direct flights between China and Egypt, but with relationships deepening between the two regions, investing in tourism seems a logical next step.
Latin America
China has doubled down on its efforts in Latin America, where it invested $65 billion in government loans in 2015, in addition to funding for infrastructure projects. For example, the country plans on constructing a railroad stretching 3,300 miles from Brazil’s Atlantic coast to Peru’s Pacific coast.
China plans on investing $250 million into the region over the next decade. Latin America provides the nation with much needed raw materials like iron, oil, soy, as well as many other foods (also read: China: A Catalyst to the Global Commodity Market).
The United States
Although the two have their tensions, China has a significant investment presence in the United States. According to research from Mergermarket, Chinese companies invested over $51 billion into the U.S. last year through 65 deals, representing a 360% increase from 2015. Apparently, Chinese investments made up 12% of all inbound mergers and acquisitions in the U.S., and huge step up from the 2% of foreign investments in 2015.
Some of the biggest deals of last year included Dalian Wanda’s $3.5 billion acquisition of Legendary Entertainment, a Hollywood production company; this deal gave Wanda the rights to blockbusters like The Dark Knight and Jurassic World. Another huge transaction involved Chinese conglomerate HNA. HNA agreed to pay Blackstone Group $6.49 billion for a 25% stake in Hilton Worldwide (HLT - Free Report) , a deal that will help both HNA and Hilton take a bite out of China’s fast-growing tourism market.
But the biggest Chinese investment was when Anbang Insurance Group completed most of its $6.5 billion acquisition of Strategic Hotels & Resorts, a deal that included 15 properties like the JW Marriot Essex House in New York and the Four Seasons in Washington.
Research from the Rhodium Group and the National Committee on U.S.-China Relations shows that Chinese firms established 1,583 facilities in the United States by the end of 2014, and spent roughly $46 billion on new establishments and acquisitions between 2000 and 2014. China-affiliated companies now directly employ more than 80,000 Americans, and have invested in such cities as the Raleigh-Durham Triangle, Chicago, and New York City, amongst numerous others.
Looking Ahead
China’s global involvement is not solely limited to foreign investments. Its growth would not have been possible without massive swaths of resources that it has received through trade with other economies (also read: Here’s How Trade Drive China’s Economy).
We could see a further rise in China’s outward investments in the services and other consumer-centric sectors. This would be accompanied by an increase in China’s “soft power,” a phrase coined by Harvard professor Joseph S. Nye. Soft power refers to the use of economic and cultural influence to gain global standing. The same way U.S. mannerisms and fashion trends have spread across the world, Chinese influence may, too, become more prevalent moving forward.
For a look at more investment opportunities in China, check out this special edition of the Zacks Friday Finish Line, where hosts Ryan McQueeney and Maddy Johnson are joined by Brendan Ahern, the Chief Investment Officer of KraneShares. KraneShares is a leading provider of China-focused ETFs and Chinese investment education.
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How Foreign Investments Impact China's Global Growth
According to data from the World bank, China has been investing heavily internationally, having invested over $2.27 trillion (investors should note this data excludes Hong Kong and Macao, which are special administrative regions) in nations abroad between 2005 and 2015. Last year, China’s foreign direct investments soared 40% to $189 billion.
This data also shows that China made its first foreign investment, a humble $430 million, back in 1982. Since then, things have clearly changed. Rapid growth within China has led to a massive increase in demand for resources, which the country has sought to help satiate through foreign investments.
Africa
Due to China’s recent sluggish economic growth, its total foreign investments have decreased since 2013, during which it totaled $290 billion. Some of the country’s newest partnerships are with burgeoning African nations, though China’s slowdown has made African leaders express concern about its continued involvement (or possible lack thereof) in the region.
In December 2015, at the Forum on China-Africa Cooperation, President Xi responded to those concerns by offering a $60 billion to African states that would come in loans and export credits; only $5 billion would arrive as grants and interest-free loans. Hosted in Johannesburg, the summit brought together delegates from 50 African countries, the African Union, and China, and Mr. Xi told leaders that the funds would be invested in 10 projects over the course of the next three years at the time.
The Middle East
China is also notably involved throughout the Middle East. The bulk of the country’s investment in the region is in the energy sector, and this makes sense, as the Middle East is home to oil and gas-rich nations like Iraq, Oman, Qatar, and Saudi Arabia. Last January, Mr. Xi offered $55 billion worth of loans and investments to the region that capped off a high-profile trip.
China has invested in other real estate and utility ventures in the region. The country also set up a joint $10 billion investment fund in late 2015 with the United Arab Emirates as part of Beijing’s efforts to create closer commercial and political with the Middle East; the two countries hope to build new trade routes between the East and West.
One can’t leave out China’s growing tourism interests in the region, too. In 2015, the number of Chinese tourists visiting Egypt, for instance, rose considerably from 60,000 in 2014 to 135,000. It helps that there are direct flights between China and Egypt, but with relationships deepening between the two regions, investing in tourism seems a logical next step.
Latin America
China has doubled down on its efforts in Latin America, where it invested $65 billion in government loans in 2015, in addition to funding for infrastructure projects. For example, the country plans on constructing a railroad stretching 3,300 miles from Brazil’s Atlantic coast to Peru’s Pacific coast.
China plans on investing $250 million into the region over the next decade. Latin America provides the nation with much needed raw materials like iron, oil, soy, as well as many other foods (also read: China: A Catalyst to the Global Commodity Market).
The United States
Although the two have their tensions, China has a significant investment presence in the United States. According to research from Mergermarket, Chinese companies invested over $51 billion into the U.S. last year through 65 deals, representing a 360% increase from 2015. Apparently, Chinese investments made up 12% of all inbound mergers and acquisitions in the U.S., and huge step up from the 2% of foreign investments in 2015.
Some of the biggest deals of last year included Dalian Wanda’s $3.5 billion acquisition of Legendary Entertainment, a Hollywood production company; this deal gave Wanda the rights to blockbusters like The Dark Knight and Jurassic World. Another huge transaction involved Chinese conglomerate HNA. HNA agreed to pay Blackstone Group $6.49 billion for a 25% stake in Hilton Worldwide (HLT - Free Report) , a deal that will help both HNA and Hilton take a bite out of China’s fast-growing tourism market.
But the biggest Chinese investment was when Anbang Insurance Group completed most of its $6.5 billion acquisition of Strategic Hotels & Resorts, a deal that included 15 properties like the JW Marriot Essex House in New York and the Four Seasons in Washington.
Research from the Rhodium Group and the National Committee on U.S.-China Relations shows that Chinese firms established 1,583 facilities in the United States by the end of 2014, and spent roughly $46 billion on new establishments and acquisitions between 2000 and 2014. China-affiliated companies now directly employ more than 80,000 Americans, and have invested in such cities as the Raleigh-Durham Triangle, Chicago, and New York City, amongst numerous others.
Looking Ahead
China’s global involvement is not solely limited to foreign investments. Its growth would not have been possible without massive swaths of resources that it has received through trade with other economies (also read: Here’s How Trade Drive China’s Economy).
We could see a further rise in China’s outward investments in the services and other consumer-centric sectors. This would be accompanied by an increase in China’s “soft power,” a phrase coined by Harvard professor Joseph S. Nye. Soft power refers to the use of economic and cultural influence to gain global standing. The same way U.S. mannerisms and fashion trends have spread across the world, Chinese influence may, too, become more prevalent moving forward.
For a look at more investment opportunities in China, check out this special edition of the Zacks Friday Finish Line, where hosts Ryan McQueeney and Maddy Johnson are joined by Brendan Ahern, the Chief Investment Officer of KraneShares. KraneShares is a leading provider of China-focused ETFs and Chinese investment education.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look. See the pot trades we're targeting>>