The United States has been the number one investment destination for top Chinese companies and wealthy investors for a long time. The U.S has lost that position to Singapore this year based on the latest report from the Economist Intelligence Unit (EIU).
The EIU looks at a number of important markets such as financial services, consumer goods, healthcare, auto, telecommunications and energy sectors.
The study carried out by the EIU looked at the top overseas investment countries that Chinese investors were interested in.
The report showed that Singapore is now the first choice for Chinese investors while the United States is in second place. Hong Kong came in third on the list followed by Malaysia and Australia took the fifth place.
The EIU study said
Malaysia and Singapore stand out as attractive BRI (Belt and Road Initiative) destinations, providing an investment environment that offers opportunities as well as low levels of risk
The EIU report which was last published in 2015 had Singapore in second place back then. Things have changed in the last couple of years as Chinese firms were interested in investing in cutting edge technology surrounding financial markets, the electric auto industry and renewable energy.
Chinese investors still preferred developed markets as there number one investment choice but were now also very interested in developing markets as they have shown the highest gains in the recent past. The 2015 EIU report clears shows this as Hong Kong was ranked in 7th place and Malaysia held the 21st place. Some of the other countries that saw their ranking improve in the 2017 EIU report include Thailand, Kazakhstan and Iran.
The commerce ministry in China noted that BRI countries received non-financial overseas direct investment of $14.8 billion in 2015 and $14.5 billion in 2016. BRI countries are expected to register a drop in both non-financial overseas direct investment and direct overseas investment in 2017.
One of the reasons for the drop in overseas investment is because the Chinese government has increased its regulatory oversight into foreign investments. The drop in overseas investment is not expected to last a long time as major Chinese firms such as Alibaba and Tencent are very interested in investing heavily into e-commerce Asian start-ups.
The United States dropped from number one to number two on the rankings while India dropped from 31 to 36. One of the reasons for this decline is due to to escalations in foreign relations between China and India and trade disputes between China and America.
