October 27, 2014

China’s overseas investment to increase 10% a year

China has announced that its foreign direct investment is projected to rise by 10% a year for the next five years, following a relaxation in its trade regulations.

The country’s Ministry of Commerce (MOFCOM) now expects that China will, for the first time in its history, become a net exporter of capital "in the near future."

The revised MOFCOM regulations, published earlier this year, have lifted Chinese firms’ obligation to seek government approval for most overseas investments.

China’s outbound investment has already grown significantly in recent years, from US$2.7bn in 2002 to $108bn in 2013.

Our author Joachim Wagner has written about the effect of international activity on firm performance, arguing that trade liberalization tends to benefit better performing firms and therefore contributes to economic growth.

Elsewhere, L. Alan Winters has written about the impact of international trade regulations on employment, suggesting that liberalization can boost job creation in developing countries in the long-term.

Read more here.

Related articles:
The effect of international activity on firm performance, by Joachim Wagner
International trade regulation and job creation, by L. Alan Winters