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Chinese investment in Europe and North America retreated in 2017 in tandem with China's posting its first fall in foreign direct investment globally since 2006 as stricter guidelines were imposed.


Chinese FDI into North America fell sharply by 35 percent to US$30 billion last year amid government policies restricting outbound investment, according to a report of global law firm Baker McKenzie's and consulting company Rhodium Group.


Although FDI into Europe soared 76 percent to US$81 billion, the growth was solely due to the delayed completion of ChemChina's record US$43 billion takeover of Swiss agribusiness company Syngenta. If this mega deal had not been completed in 2017 Cheap David Desharnais Jersey , Chinese investment in Europe would have tumbled 22 percent to US$38 billion.


But the figures backed up official Chinese data showing that the country's global FDI flows had declined by over a third in 2017 — the first drop since 2006.


"The main reason for the fall was guidelines introduced by the Chinese government imposing additional restrictions on outbound investment to address balance of payment concerns and mitigate perceived risks for China's financial system arising from rapid overseas investment," Baker McKenzie said.


Additionally, Chinese FDI faced growing regulatory scrutiny in many host countries. The Committee on Foreign Investment in the US was especially strict in its monitoring that at least seven major deals were impacted greatly, according to the report.


Also Chinese capital controls introduced in late 2016 greatly slashed the average size of deals announced in 2017 across all industries and investor types. The deals fell from US$626 million in North America in 2016 to US$282 million last year Cheap Michael Grabner Jersey , and in Europe they declined from US$346 million in 2016 to US$162 million.


"The momentum of deals involving Chinese investors dropped sharply from Q3 2016 to the first half of 2017," said Mike DeFranco, global head of M&A at Baker McKenzie.


"Now that it is clear how the rules have changed for Chinese investors at home and abroad, activity is picking up Cheap Kevin Shattenkirk Jersey , and 2017 was still the second-best year on record in North America and technically the best in Europe, despite all the challenges for dealmakers," he said.


Chinese investors cancelled or withdrew 19 announced deals worth over US$12 billion in North America and Europe in 2017, compared with the 30 deals cancelled in 2016. Around US$5 billion of Chinese investments are being reviewed by regulators in the US and Europe.


Chinese investors favored investment in real estate and hospitality Cheap Chris Kreider Jersey , transport, utilities and infrastructure as well as ICT in both North America and Europe.

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