With $225 billion in overseas deals under its nationwide belt, China has been busy acquiring properties overseas, and at that record number, reports The New York Times, the tide may be shifting.
That’s on the heels that money may be moving more quickly from the domestic realm than the government would like, and thus, there seems to be some directive that the pace of investment should be scaled back, at least a bit. In terms of scale, the $225 billion that jumped borders in 2016 represented double the amount in 2015.
The signal comes from payments this past weekend where China’s commerce meeting said at a news briefing that “blind and irrational investment” has marked deal making. The minister, Zhong Sang, said that government officials would look to tighten scrutiny on what the Times cited as a “small number” of companies, quoting the minister, who went on to say that “some have even had a negative impact on our national image.”
The comments come as deals have been scuttled, and that may be due to the scrutiny via the government or due to second thoughts from the companies themselves (or might it be a combination of the two?). The latest deal blown apart, a high-profile one, was the announcement at the end of the week in which owners of Dick Clark Productions said the agreement to sell the firm for $1 billion to Dalian Wanda, a conglomerate with real estate and entertainment holdings, had been scuttled.
Separately, Anbang Insurance cancelled its deal, worth $14 billion, to buy Starwood Hotels and Resorts.
The private deal making may wane amid money flows that have been instigated by Chinese firms and individuals who have moved as much as $1 trillion outside the country in the past two-and-a-half years. Though the effort has been one to give balance to the currency on a global stage, some critics have said the money, if kept within borders, would be better off serving and circulating among the middle class. Banks have been in the midst of curbing money they let move abroad in an effort to take more money in, to maintain at least some balance. Dividend payouts may be up for curbing in terms of fund flows outside the country.