CHINA'S overall outward direct investment (ODI) amounted to US$25.7 billion, down 2.8% year-on-year (YOY), and non-financial ODI was US$24.2 billion, down 3.9% YOY; Belt and Road (B&R) non-financial ODI grew 11.7%, and mainly invested in countries and regions such as Asean, Kazakhstan and UAE, according to the Overview of China Outbound Investment in Q1 2020, released by EY, a global assurance, tax, transaction and advisory services company, on April 29.

The announced value of China overseas mergers and acquisitions (M&As) totalled US$3.5 billion, down 78% YOY, the lowest value in a single quarter over the past 10 years; 108 deals were announced, down 21% YOY. With the continuous impact of the Covid-19 pandemic, it is expected that China overseas M&As will continue to slow down in 2020.

TMT (technology, media & entertainment and telecommunications) was the most favoured investment sector with a significant growth in proportion, accounting for nearly 40% of the total. Other key sectors include real estate, hospitality & construction (RHC), advanced manufacturing and health & life sciences sectors.

Europe was the most popular overseas M&A destination for Chinese enterprises, with the announced M&A deal value accounting for over 40% of the total. All continents recorded significant declines in deal values except Africa, while the Netherlands and Malaysia emerged as Chinese investors’ most favoured overseas M&A countries.

The total value of newly-signed China overseas engineering, procurement and construction (EPC) contracts increased by 9.4% YOY to US$55.4 billion, with a number of big projects signed; EPC turnover was US$28.0 billion, down 15.3% YOY.

“Affected by the Covid-19 pandemic, cross-border investment activities will continue to slowdown in the short term. Meanwhile, the regulation and scrutiny of foreign investment in developed countries has become more stringent, and investors will remain prudent,” says Loletta Chow, global leader of EY China Overseas Investment Network. “Despite cross-border investment opportunities and challenges for Chinese enterprises will increase concurrently, the internationalization of Chinese enterprises will still be the general trend in the future.”