Country-Risk Rating of Overseas Investment from China

China is one of the most important players in the global investment scene. However, with the rapid growth of overseas investment, there is also sharp increase of the investment risks. Their country-risk rating system constructs five indicators, including economic fundamentals, ability to service debt, social flexibility, and political risk.

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China is currently one of the most important players in the global investment scene. However, with the rapid growth of overseas investment, there is also sharp increase of the investment risks. Their country-risk rating system constructs five indicators, including economic fundamentals, ability to service debt, social flexibility, political risk and the relation with China, to provide warning and reference for Chinese enterprises and sovereign wealth funds. This year’s rating system expands to fifty-seven countries, which makes their system more comprehensive. China carries on risk rating for thirty-five “One Belt One Road” economies to enhance the reference value for policymakers.

China’s outbound direct investment hit a new high in 2016, reaching $196.15 billion, making the country the world’s second-largest overseas investor. The volume of its outbound direct investment increased by 34.7% year-on- year in 2016 and accounted for 13.5% of the world’s total –the first time it exceeded 10%. Since 2003, when the Ministry of Commerce joined hands with the National Bureau of Statistics and the State Administration of Foreign Exchange to start releasing authoritative investment data annually, China’s outbound direct investment has kept increasing for 14 consecutive years. From 2002 to 2016, the annual average growth of its outbound direct investment reached 35.8%.

In 2016, China’s outbound direct investment once again exceeded the foreign direct investment it received, making it a net capital exporter for two consecutive years. Meanwhile, its outbound direct investment stock hit $1.35739 trillion at the end of 2016, China had the most overseas M&A deals in history in terms of both number and value of M&A deals. In the future, China is expected to bring out more of its investment potentials and build a win-win cooperative relationship with other countries following its economic transition and upgrading, rising competitiveness of Chinese enterprises in overseas markets and steady advancement of the Belt and Road initiative.