BEIJING •China last year posted its first decline in non-financial outbound direct investment since it began publishing the data in 2003, as firms backed off from speculative overseas investment amid a government crackdown.

Non-financial outbound direct investment last year fell 29.4 per cent on the year to US$120.08 billion (S$159 billion), the Commerce Ministry said yesterday.

Outbound direct investment (ODI) last month alone rose 49 per cent on the year to US$12.53 billion, a Reuters calculation on official data showed, extending gains from November's annual growth of 34.9 per cent.

The positive ODI growth in the past two months has been fuelled largely by China's increased investments in the manufacturing and information sectors, the ministry said, while no new Chinese investments went to the property, sports and entertainment industries.

"Irrational" overseas investment has been effectively contained, added the ministry.

Overseas investment by Chinese firms has fallen sharply since Beijing in late 2016 levied strict controls on capital leaving the country.

China says it continues to encourage genuine overseas deals, but has vowed to limit investment in overseas property, hotels, entertainment, sports clubs and film industries it suspects is more speculative and aimed at evading tight capital controls.

Investment in countries involved in China's Belt and Road Initiative, an extensive infrastructure plan meant to link Asia with the Middle East and Europe, totalled US$14.36 billion last year, the Commerce Ministry said. Belt and Road deals accounted for 12 per cent of total investments last year, up 3.5 percentage points from a year earlier.

Analysts expect that after the tumble in ODI last year, China is likely to see an increase in overseas investment deals this year. "The yuan's appreciation has provided some impetus for Chinese firms to do deals overseas", said ING Great China economist Iris Pang.

Around the second quarter, it can be expected that China is clearly having big capital inflows, "so that Safe can approve more overseas deals", she said. Safe is the acronym for the State Administration of Foreign Exchange.

The Chinese yuan has risen about 1.2 per cent against the US dollar this year, after a gain of roughly 6.8 per cent last year, reversing three straight years of depreciation.

Foreign direct investment (FDI) into China last month fell 9.2 per cent from a year earlier to 73.94 billion yuan (S$15.2 billion), the first decline in five months. For 2017, FDI rose 7.9 per cent to 877.56 billion yuan. China faces relatively big external pressure in attracting FDI this year due to uncertainties in the global investment environment, the Commerce Ministry added.

REUTERS