Speculation when ODI will overtake FDI
February 24, 2014 Category Foreign investment, Weekly
Over the years, many predictions have been made regarding when China would achieve parity between its ODI and FDI. In 2011, Zheng Chao, an official at the Ministry of Commerce (MOFCOM), said ODI would exceed FDI within three years, predicting annual growth of 20% to 30% for ODI. In January, Commerce Ministry Spokesman Shen Danyang said ODI might exceed FDI in the coming year or two. A study from the Economist Intelligence Unit (EIU) predicted ODI would exceed FDI by 2017. Because there was still a USD27.4 billion gap between FDI and ODI last year, expecting the switch to occur this year is probably a little optimistic. Last year, China’s ODI expanded 16% year-on-year to USD90.2 billion, while FDI grew by 5.3% to reach USD117.6 billion. The five-year compound annual growth rate for FDI was 4.9%, while that of ODI was 16.6%. Assuming that these growth rates continue in each of the next three years, ODI will exceed FDI in 2016. More than any change in economic conditions, the biggest factor driving ODI and FDI in the coming years will be changes to government policy. Many approvals which were previously needed for ODI will be scrapped. Approvals will only be needed for investment in sensitive sectors and if the amount exceeds USD1 billion. More liberal policies in the China (Shanghai) Pilot Free Trade Zone (FTZ) on the other hand could lead to a large increase in FDI, the China Daily reports.
- KURT VANDEPUTTE (UMICORE) APPOINTED CHAIRMAN OF THE BOARD OF THE FLANDERS-CHINA CHAMBER OF COMMERCE (FCCC)
- Webinar: “Knowing Your Chinese Partner” – May 26, 2021, 10 am – 12 am
- EMA starts rolling review of CoronaVac, WHO approves Sinopharm vaccine for emergency use
- The Global Times warns not to politicize the Comprehensive Agreement on Investment (CAI)
- Hainan to become biggest duty-free market in the world