China Economic Update – April 2016
China becoming a major player in global mergers and acquisitions.
China’s foreign investment continues to grow but its targets are changing
- In March 2016, the privately listed Chinese insurance firm Anbang made a US$14 billion bid to purchase the US hospitality firm Starwood Hotels & Resorts (owners of the Sheraton and Westin brands). Although the bid proved ultimately unsuccessful, the scale of this high profile takeover bid highlights the growing influence of Chinese firms in global mergers and acquisitions activity. It also demonstrates that there is more to the recent outflow of capital from China than hot money flows and debt repayment – as China’s foreign investment continues to grow.
- That said, the pattern of foreign investment is changing, with China targeting different countries and sectors than in the initial wave that commenced in the mid-2000s.
- Although Australia remained the second largest recipient in 2015, the total value of investment in Australia has started to fall back, relative to the United States. Between 2005 and 2013, the cumulative value of investment was almost identical between the two countries, but more recently investment in the United States has accelerated – widening the gap.
- While energy remained the largest single sector for China’s global investment across 2014 and 2015, its share declined to around 22% of the total – with significant growth in Real Estate, Transport and Technology sectors. In the past two years, one-third of China’s investment in the United States has been directed towards the technology sector – with these investments likely to provide support to the country’s growing services sectors.
For further details, please see the attached document: