China is expected to relax curbs on outbound investment following a rebound in March after four months of weak capital outflows, according to the Financial Times.
Grisons Peak found that Chinese outbound investment – from buying minority stakes to 100% acquisitions – increased to USD 17bn in March, from a monthly average of USD 11bn in the four prior months. It still has not caught up to the USD 32bn of deals in October, before capital controls were tightened.
Mizuho Securities’ Chief Asia Economist in Hong Kong, Shen Jianguang, predicted capital controls would be relaxed this year, as yuan depreciation and capital flight pressure “have been largely alleviated”. Additionally, domestic growth improved in the first quarter, domestic interest rates have tightened, and Chinese companies have mostly paid off foreign debts.
People’s Bank of China Deputy Governor Pan Gongsheng said in February that China’s capital account would remain opened up. He said in March that the increase in outbound investment last year was partly due to “irrational and abnormal” investments, particularly by companies buying overseas assets unrelated to their core business.
Grisons Peak CEO Henry Tillman said the March figures revealed that the latest outbound activity was following the central government’s guidance.