Chinese overseas investment — a boon to Los Angeles real estate in recent years — is poised to drop for the first time in about 15 years, according to a new report by a government think tank.
Total direct investments are expected to be around $118 billion, a level seen in 2015, according to economists at the Chinese Academy of Social Sciences, who pointed to greater scrutiny of deals by Chinese officials and potentially tougher trade measures in the U.S.
In recent years, Chinese overseas direct investment has been growing at a clip of 35 percent a year since 2013. China’s top economic planning official recently estimated that direct investment would hit $170 billion in 2016, according to the Wall Street Journal.
Chinese investment in Los Angeles has bankrolled massive deals in recent years, with companies such as Greenland USA building one of the biggest projects in Downtown L.A.
“We’re still seeing strong desire by companies to invest in foreign markets,” Zhang Ming, a member of the think tank team that analyzed China’s foreign investment, told the Journal. “But a combination of tighter domestic policies and heightened political risks overseas mean outbound investments for 2017 would be lower than the level in 2016.”
China’s own economy has been lagging, and outbound investment has been fueled by the country’s weak currency. But Chinese officials imposed new measures in November in an effort to slow outbound investment. At the time, officials said there was concern that companies were faking deals in an effort to move money out of the country. [WSJ] — Katherine Clarke