China is investing nine times more into Europe than it is into North America as policies force divergence, a report released this week reveals.
Chinese outbound foreign direct investment (FDI) has dramatically swung toward Europe in the first half of 2018 and its FDI into North America has dropped by a whopping 92 percent in the last year, from $24 billion to $2 billion, according to multinational law firm Baker Mackenzie.
In the first six months of the year, newly-announced Chinese mergers and acquisitions (M&A) into Europe were $20 billion compared to $2.5 billion in North America, while completed Chinese investments in Europe exceeded those in North America six-fold, at $12 billion compared to $2 billion.
Policy in both China and the U.S. is pushing this shift, as lawmakers act to protect their industries or prevent capital outflow. Amid increasing capital outflows in 2016, China tightened regulations over outward investments, cracking down on outbound FDI in the second half of that year.
Chinese firms have been divesting from North America at a rapid rate amid this tightening campaign, with $9.6 billion of completed divestitures in the first half of 2018 and another $5 billion pending, the report said. Europe also saw Chinese divestment, with some $1 billion of assets sold in that time frame and another $7 billion pending.