china’s investment practices, patterns, and strategies
TRANSCRIPT
China’s Investment Practices, China’s Investment Practices, Patterns, and StrategiesPatterns, and Strategies
James R. BarthJames R. BarthAuburn University and Milken InstituteAuburn University and Milken Institute
11
Auburn University and Milken InstituteAuburn University and Milken [email protected]@milkeninstitute.org
China 2015: China’s Outward Direct InvestmentChina 2015: China’s Outward Direct InvestmentSponsored by the Office of Asian Pacific and Latin American AnalysisSponsored by the Office of Asian Pacific and Latin American Analysis
Washington, DCWashington, DCJuly 17, 2008July 17, 2008
Talking PointsTalking Points
� How are Chinese firms financing their overseas investments, including through IPOs and corporate earnings? � Most Chinese firms fund overseas investments through their own
earnings or earlier IPOs when they obtained foreign exchange through IPOs abroad. It is unlikely that firms did IPOs because they wanted to invest abroad.
� What role do foreign exchange reserves, through the CIC (or more recently SAFE) in supporting the overseas expansion of Chinese firms?� It is stated that SAFE and CIC are portfolio investors and do not engage
in direct investments or make loans. As indicated above, Chinese SOEs invest abroad through a combination of own earnings and bank loans. They do not obtained funds from China’s foreign exchange reserves. The CIC has indicated that they are investing through fund managers and acquire direct holdings of listed securities and private equity.
22
Talking PointsTalking Points� What are the roles of the China Development Bank, China Export Import Bank,
and China's state-owned "commercial" banks in providing financing for Chinese firms going global?� Export Import Bank lends according to the policy-based rules, which would be
either aid-loans or follow OECD rules of export financing. The CDB and listed Chinese banks are supposed to lend according to commercial terms that are set according to the risks involved. The PBC allows them some discretion in setting lending rates according to their risk levels, but the rate are nonetheless subject to ceilings. My impression is that they do not subsidize such loans.
� How important is "below market" financing for Chinese firms' expansion overseas?� How important is "below market" financing for Chinese firms' expansion overseas?� My understanding is that typically Chinese firms do not get below market
financing, but there are aid programmes where the borrower may get below market rates, (e.g. where these are grant related) that may facilitate overseas investments. However, in 2004, a policy was introduced by the Ministry of Finance and the Ministry of Commerce to subsidize investment by Chinese companies in overseas natural resources.
� What is the significance of CIC's ownership of Central Huijin? Does CIC have a special dispensation, or are its investment choices reviewed at higher political levels?� Central Huijin was part of the package taken over by CIC, so it is part of its
portfolio. The official policy is that CIC is charged with delivering better returns on its resources and it has an independent governance system to allocate its resources.
33
Talking PointsTalking Points
� What is Beijing doing to ensure Chinese banks can adequately support Chinese firms' overseas activities?� The Chinese banks follow their customers just like banks in other countries
that also follow their customers abroad. The CBRC supervises the banks and is supposed to ensure that they lend according to risk criteria and have the proper internal controls and capital resources to back such risks. Chinese banks are still quite conservative with respect to overseas expansion and the outward direct investment trend is still in its infancy. I personally do not see the direct investment trend is still in its infancy. I personally do not see the Chinese banks venturing abroad on the same scale as the Japanese banks in the 1980s.
� Concluding Comment� There are a lot of emotional views on SWFs, particularly the view that they
will try to gobble up Western assets. Given the global imbalances, why should the surplus countries invest only in bonds? Each country has its own takeover rules so that there are limits to any acquisitions by any single party. In addition, there are National Security policies that would apply for strategic assets. It seems reasonable to assume that SWFs want to protect their principal and total returns, without evidence to the contract.
44
� We will strengthen and improve foreign exchange administration, and actively explore and develop channels and means for appropriately using state foreign exchange reserves.
� China is preparing for the establishment of a foreign exchange investment company, which will not be affiliated to any government department or institution.
Motivation for China’s Outward Motivation for China’s Outward Foreign Direct InvestmentForeign Direct Investment
55
institution.
� We will strengthen and improve foreign exchange administration, and actively explore and develop channels and means for appropriately using state foreign exchange reserves.
� The new company will not have any adverse impact on U.S.-dollar denominated assets.
- Chinese Premier Wen Jiabao
Source: Embassy of the P.R. China in the USA, 2007.
� According to the “10th Five-Year Plan for National Economic and Social Development,” China will “proactively make use of overseas natural resources, establish overseas supply bases for both oil and gas, diversify oil imports, build up a strategic petroleum reserve and maintain national energy security.” (Source: People’s Daily)
� In 2004, a policy was introduced by the Ministry of Finance and the Ministry of Commerce to subsidize investment by Chinese companies in overseas natural resources. (Source:
Motivation for China’s Outward Motivation for China’s Outward Foreign Direct InvestmentForeign Direct Investment
to subsidize investment by Chinese companies in overseas natural resources. (Source: Ministry of Commerce)
� The National Social Security Fund has been allowed to invest abroad since 2006 with an upper limit of 20% of the fund’s total assets, currently amounting to over RMB400 billion (USD55 billion). (Source: Economic Focus, Hang Seng Bank, February, 2008)
� “[A] force driving outward FDI by large countries such as China and India has been the desire to secure long-term supplies of natural resources (particularly oil and natural gas, iron ore and other minerals) to meet domestic demand.” (Source: Carlos Fortin, UNCTAD)
66
� The State Asset Supervision and Administration Commission (SASAC) was set up in April 2003 with the mandate of turning the country's top state-owned enterprises (SOEs) under its control into 50 global multinational corporations that feature on the global Fortune 500 list. (Source: China Economic Review, February 2004)
� It is not only the biggest SOEs that are being encouraged to go abroad. Every company that wants to invest overseas must get regulatory approval, but in 2003 the Ministry of
Motivation for China’s Outward Motivation for China’s Outward Foreign Direct InvestmentForeign Direct Investment
that wants to invest overseas must get regulatory approval, but in 2003 the Ministry of Commerce (MOFCOM) and the State Administration of Foreign Exchange (SAFE) introduced a program that allowed overseas investments of less than US$3 million to be approved at the local government level rather than through the lengthy and complicated process of applying to Beijing. (Source: China Economic Review, February 2004)
� Domestic companies can develop business in a new market, exploit benefits of economies of scale, or even acquire valuable resources and strategic assets in the form of outward FDI. Moreover, local enterprises can make use of their capital to buy a stake in an overseas institution for raising returns and gaining expertise of management. (Source: China Economic Review, February 2004)
77
China’s Foreign Exchange ReservesChina’s Foreign Exchange Reserves
1.2
1.4
1.6
1.8
US$ trillions
May 2008: $1.797 trillion
88
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
China’s Foreign Exchange ReservesChina’s Foreign Exchange Reserves
Foreign exchange reserves
(US$ billions)
GDP(US$ billions)
Ratio of foreign
exchange to GDP(%)
Ratio of foreign
exchange to imports (%)
1999 155 1,083 14 93
2000 166 1,198 14 74
99
2000 166 1,198 14 74
2001 212 1,325 16 87
2002 286 1,454 20 97
2003 403 1,641 25 98
2004 610 1,932 32 109
2005 819 2,234 37 124
2006 1,066 2,627 41 135
2007 1,528 3,240 47 160
Sources: National Bureau of Statistics of China, State Administration of Foreign Exchange, and World Economic Outlook Database 2008.
(US$ billions)Year
Established
Standard Chartered, October 15,
2007
Wall Street Journal,
September 10, 2007
Breakingviews.com,
October 25, 2007
Abu Dhabi Investment Auth., UAE 1976 625 875 650
GIC, Singapore 1981 215 330 100 - 330
Government Pension Fund, Norway 1990 322 300 322
Top Ten Sovereign Wealth FundsTop Ten Sovereign Wealth Funds
1010
China Investment Co., China 2007 200 200 200 - 400
Stabilization Fund, Russia 2004 128 100 128
Temasek Holdings, Singapore 1974 108 100 108
Kuwait Investment Authority, Kuwait
1953 213 70 213
Australian Future Fund, Australia 2004 42 40 30
Permanent Reserve Fund, U.S. 1976 40 37 40
Brunei Investment Authority, Brunei 1983 30 30 30
Total 1,923 2,082 1,821 – 2,251
Initial Capitalization of CICInitial Capitalization of CIC$78 Billion of $200 Billion Special Treasury Bonds$78 Billion of $200 Billion Special Treasury Bonds
China Agricultural China Agricultural BankBank
Ministry of FinanceMinistry of Finance
China Investment China Investment
(1) Special Treasury Issue
(4) Inject Capital
Short–Term Money Market
China Investment China Investment CorporationCorporation
People’s Bank of ChinaPeople’s Bank of China
(3) Special Treasury Sale (entire amount)
Sale of Special Treasuries (PBC operations)
(2) Use Yuan to Buy Foreign Reserves
Source: Nomura Capital Market Review, Vol. 10, No.4.
1111
Investment Plan of CICInvestment Plan of CIC
� 1/3 of the capital would be used to purchase Huijin, founded in 2003, that now controls China’s major state-owned commercial banks: ICBC, CCB, BOC and ABC.
� 1/3 of the capital would be invested in global financial markets.1. May 22, 2007 - invested 3 billion U.S. dollars in the U.S. private equity firm
Blackstone Group.Blackstone Group.2. Nov. 20, 2007 – invested about 100 million U.S. dollars in the IPO of the
China Railway Group in Hong Kong.3. Dec. 19, 2007 - invested 5 billion U.S. dollars in Morgan Stanley.
� The remainder would replenish the capital of the Agricultural Bank of China and China Development Bank.
- Li Yong, Vice Minister of Finance July 7, 2007
1212
Most Bank Loans Go to State Owned EnterprisesMost Bank Loans Go to State Owned Enterprises
Contribution to GDP
State-owned
enterprises23%
Share in corporate bank loans
State-owned enterprises
35%
Private and foreign
enterprises27%
1313
Collective enterprises
6%
Private and foreign
enterprises52% Share-
holding enterprises
19%
35%
Shareholding enterprises
27%
Collective enterprises
11%
Outward Nonfinancial Direct Investment Outward Nonfinancial Direct Investment FlowFlow
19821982--20072007
12
14
16
18
20US$ billions
1414
0
2
4
6
8
10
1982 1987 1992 1997 2002 2007
Sources: UNCTAD and Chinese Ministry of Commerce.
Note: China released its own ODI figures beginning in 2002. Prior data are only available from UNCTAD.
Outward Foreign Direct Investment Flow Outward Foreign Direct Investment Flow of Selected Countriesof Selected Countries
20062006
119.5115.7
101.1
80
100
120
140US$ billions
1515
45.8 45.6 42.9 39.7 38.8 34.1 32.625.9 21.2
13.16.2 4.3 2.5
0
20
40
60
Netherla
ndFra
nce
United
King
dom
Japan
Germany
Swi tzerla
ndIta
lySpa
inCan
ada
Hong
Kong
Sweden
China
Russia
Mex
icoSou
th K
orea
Brazil
Source: Chinese Ministry of Commerce.
Outward Foreign Direct Investment Stock Outward Foreign Direct Investment Stock of Selected Countries of Selected Countries
December 2006December 2006
2,051
1,2381,500
2,000
2,500US$ billions
1616
967853
641
387 381 293159 118 118 91 120 72 36 28
0
500
1,000
United
Stat
es
United
King
dom
GermanyFra
nce
Nethe
r land
Japan
Spain
I taly
Austra
liaDen
mar
kIre
land
China
Russia
Brazil
South
Korea
Mex
ico
Source: Chinese Ministry of Commerce.
GDP and Composition of Outward GDP and Composition of Outward Investment Stock for Selected CountriesInvestment Stock for Selected Countries
Equity BondsUS$ Billions
GDP
Percent of GDP
Outward Portfolio Investment Stock
Other Outward Investment
Stock (including bank
loans)
Outward Direct
Investment Stock
Source: IMF, State Administration of Foreign Exchange, and US Bureau of Economic Analysis.
Note: 2007, except * denotes 2006 and ** denotes third quarter 2007.
US$ BillionsChina 3,240 3.32 0.58 6.81 12.53India* 915 2.62 0.04 0.04 2.15Brazil** 1,287 9.15 0.37 0.88 3.54Russia* 989 21.20 0.05 1.19 18.23United States 13,841 24.08 37.36 10.68 28.33Japan* 4,377 10.27 11.66 41.88 22.41Germany** 3,307 33.97 32.71 44.09 94.54United Kingdom 2,773 61.55 57.58 73.08 271.61
Percent of GDP
1717
China’s ODI Flow Is Relatively SmallChina’s ODI Flow Is Relatively Small
World: ODI flow/ GDP
3%
4%
5%
GDP: China/ World total
4%
5%
6%
Source: IMF and UNCTAD.
China: ODI flow/ GDP
0%
1%
2%
3%
1982 1986 1990 1994 1998 2002 2006
ODI flow:
China/ World total
0%
1%
2%
3%
1982 1986 1990 1994 1998 2002 2006
1818
China’s ODI Flow Is Relatively SmallChina’s ODI Flow Is Relatively Small
World: ODI
stock/ GDP20%
25%
30%
GDP: China/ World total
4%
5%
6%
Source: IMF and UNCTAD.
China: ODI
stock/ GDP
0%
5%
10%
15%
1982 1986 1990 1994 1998 2002 2006
ODI stock: China/ World total
0%
1%
2%
3%
1982 1986 1990 1994 1998 2002 2006
1919
Hong Kong and Caribbean OffHong Kong and Caribbean Off--shore Centers shore Centers Account for More Than 80 Percent of China’s Account for More Than 80 Percent of China’s
Nonfinancial ODI StockNonfinancial ODI Stock
Total ODI stock as of December 2006: US$ 75 billion
Europe3%
Africa3%
North America2%
Oceania1% Latin America
1%
Asia ex-HK
2020
3%Asia ex-HK8%
Caribbean off-shore centers
26%
Hong Kong56%
Source: Chinese Ministry of Commerce.
Note: Note: More than 12,000 Chinese companies have established firms in about 172 countries and regions by the end of 2007. (Source: http://chinareference.eu/cbn/news.php?action=fullnews&id=1365)
Outward Foreign Direct Investments by IndustryOutward Foreign Direct Investments by IndustryCumulative Flows, 2004Cumulative Flows, 2004--20062006
Oil, natural gas and other minerals
32%
Real estate1%Transportation,
warehousing & postal service
7%
Agriculture, forestry,
husbandry, fishery1%
Others3%
2121
32%
Business service and leasing
26%
Finance and banking
9%
Manufacture10%
Wholesale and retailing
11%
Source: Chinese Ministry of Commerce.
StateState--owned Enterprises Account for Majority of owned Enterprises Account for Majority of Outward Nonfinancial Foreign Direct Investment Outward Nonfinancial Foreign Direct Investment
ODI FlowODI Flow
16
20ProvincialCentral
US$ Billions
$12.2
$17.6
2222
Source: Chinese Ministry of Commerce.
0
4
8
12
2003 2004 2005 2006
$2.9
$5.5
$12.2
Composition of Outward Foreign Direct Composition of Outward Foreign Direct Investment FlowInvestment Flow
20062006
Incremental equity
investment24%
Other investment
45%
2323
Current profit reinvestment
31%
Source: Chinese Ministry of Commerce.
China’s Outward Investment ProceduresChina’s Outward Investment Procedures
ENTERPRISES
NDRCCheck firms’ capability
SAFE
Registration and transmit/ purchase foreign currency
BANK
Transmit/ purchase foreign currency
2424
ENTERPRISES
SAFECheck sourcesof funds
MOFCOMCheck condition of host country
currency verification
Source: Joseph Battat, Foreign Investment Advisory Services, IFC.
Chinese Completed M&As AbroadChinese Completed M&As AbroadJanuary 1995 January 1995 –– June 2008June 2008
25,000
30,000
35,000
US$ Mi l l ions
100
120
140
160
Number
Deal Value
Number of Deals
2525
0
5,000
10,000
15,000
20,000
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008June
0
20
40
60
80
100
Source: Dealogic.
Chinese Completed M&As Abroad:Chinese Completed M&As Abroad:Top 10 Countries by Number of DealsTop 10 Countries by Number of Deals
Total Number: 699, January 1995 Total Number: 699, January 1995 -- June 2008June 2008
Hong Kong 268
United States 78
Australia 47
Singapore 41
Germany3%
Japan
Indonesia3%
South Korea2%
United Kingdom3%
2626
Singapore 41
Canada 25
Japan 24
Germany 16
Indonesia 16
United Kingdom
14
South Korea 13
Other Countries
157
Australia9%
United States14%
Singapore8%
4%
Canada5%
Hong Kong49%
Source: Dealogic.
Chinese Completed M&As Abroad:Chinese Completed M&As Abroad:Top 10 Industries by Number of DealsTop 10 Industries by Number of Deals
Total Number: 699, January 1995 Total Number: 699, January 1995 -- June 2008June 2008
Computers & Electronics 84
Finance 69
Mining 59
Oil & Gas 59
Food & Beverage6%
Professional Services
6%
Construction/Building 7%
Computers & Electronics
2727
Oil & Gas 59
Telecom. 36
Consumer Products 35
Real Estate/Property 33
Construction/Building 32
Food & Beverage 28
Professional Services 28
Other Industries 236
Finance15%
Mining13%Oil & Gas
13%
/Building 7% Electronics17%
Telecom.8%
Consumer Products
8%
Real Estate/Property
7%
Source: Dealogic.
Chinese Completed M&As Abroad:Chinese Completed M&As Abroad:Top 10 Countries by Number of DealsTop 10 Countries by Number of Deals
Total Number: 699, January 1995 Total Number: 699, January 1995 -- June 2008June 2008C
ompu
ters
& E
lect
roni
csFi
nanc
e
Min
ing
Oil
& G
as
Tel
ecom
.
Con
sum
er P
rodu
cts
Rea
l Est
ate/
Prop
erty
Con
stru
ctio
n/B
uild
ing
Food
& B
ever
age
Prof
essi
onal
Ser
vice
sO
ther
Indu
str i
esPe
rcen
t of T
otal
Num
ber
of D
eals
Hong Kong 13.4 18.3 0.7 1.5 0.0 6.0 7.8 9.3 3.0 3.7 36.2 38.3 268
United States 25.6 5.1 0.0 3.8 0.0 2.6 1.3 0.0 0.0 5.1 56.4 11.2 78
2828Source: Dealogic.
Australia 0.0 2.1 51.1 12.8 0.0 0.0 2.1 6.4 4.3 0.0 21.3 6.7 47
Singapore 7.3 4.9 0.0 4.9 0.0 0.0 9.8 2.4 9.8 4.9 56.1 5.9 41
Canada 4.0 4.0 44.0 4.0 0.0 0.0 0.0 4.0 4.0 4.0 32.0 3.6 25
Japan 29.2 4.2 0.0 0.0 0.0 4.2 0.0 0.0 4.2 12.5 45.8 3.4 24
Germany 6.3 0.0 0.0 0.0 0.0 6.3 0.0 6.3 0.0 12.5 68.8 2.3 16
Indonesia 0.0 0.0 12.5 43.8 0.0 0.0 18.8 0.0 6.3 0.0 18.8 2.3 16
United Kingdom 7.1 7.1 28.6 7.1 0.0 0.0 0.0 0.0 0.0 14.3 35.7 2.0 14
South Korea 46.2 7.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 46.2 1.9 13
Top Ten Countries Total
13.8 11.1 7.9 4.4 0.0 3.7 5.5 5.7 3.1 4.4 40.2 77.5 542
699 Total Number of Deals
Chinese Completed M&As Abroad: Chinese Completed M&As Abroad: Top 10 Countries by Deal Value Top 10 Countries by Deal Value
Total: US$99,870 Million, January 1995 Total: US$99,870 Million, January 1995 -- June 2008June 2008
United Kingdom 20,656
Hong Kong 20,557
Singapore 8,291
US$ Millions
Australia3% Nigeria
3%
France5%
Russian Federation
2929
United States 6,614
Kazakhstan 6,602
South Africa 5,716
Russian Federation 4,192
France 3,932
Australia 2,796
Nigeria 2,771
Other Countries 17,743
Source: Dealogic.
Hong Kong25%
United States8%
Singapore10%
United Kingdom26%
Kazakhstan8%
South Africa7%
Federation5%
Chinese Completed M&As Abroad: Chinese Completed M&As Abroad: Top 10 Industries by Deal Value Top 10 Industries by Deal Value
Total: US$99,870 Million, January 1995 Total: US$99,870 Million, January 1995 -- June 2008June 2008
US$ Millions
Oil & Gas 27,419
Finance 18,574
Mining 18,522
Computers & Electronics
5%
Chemicals1%
Auto/Truck1%
Real Estate/Property
1%
3030
Utility & Energy 7,073
Transportation 6,438
Telecom. 5,110
Computers & Electronics
5,031
Chemicals 1,264
Real Estate/Property 1,246
Auto/Truck 1,208
Other Industries 7,983
Source: Dealogic.
Finance20%
Mining20%
Utility & Energy8%
5%Telecom.
6%
Transportation7%
Oil & Gas31%
Chinese Completed M&As Abroad: Chinese Completed M&As Abroad: Top 10 Industries by Deal ValueTop 10 Industries by Deal Value
Total: US$99,870 Million, January 1995 Total: US$99,870 Million, January 1995 -- June 2008June 2008O
il &
Gas
Fina
nce
Min
ing
Util
ity &
Ene
rgy
Tra
nspo
r tat
ion
Tel
ecom
.
Com
pute
rs &
Ele
ctro
nics
Che
mic
als
Rea
l Est
ate/
Prop
erty
Aut
o/T
ruck
Oth
er In
dust
r ies
Perc
ent o
f Tot
al
Dea
l Val
ues (
US$
Mill
ions
)
United Kingdom 9.9 14.4 74.0 1.2 0.0 0.0 0.0 0.1 0.0 0.4 0.0 0.21 20,656
Hong Kong 2.6 16.0 0.1 13.8 11.6 0.0 6.3 2.4 4.4 0.1 42.7 0.21 20,557
3131Source: Dealogic.
Hong Kong 2.6 16.0 0.1 13.8 11.6 0.0 6.3 2.4 4.4 0.1 42.7 0.21 20,557
Singapore 3.3 0.2 0.0 44.7 43.4 0.0 0.1 0.0 0.6 0.0 7.8 0.08 8,291
United States 2.8 50.0 0.0 0.0 0.0 0.0 30.5 0.2 0.2 1.5 14.7 0.07 6,614
Kazakhstan 100.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.07 6,602
South Africa 0.0 96.0 3.5 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.4 0.06 5,716
Russian Federation 99.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0 0.0 0.04 4,192
France 74.6 0.0 0.0 0.0 0.0 0.0 0.0 12.8 0.0 0.0 12.6 0.04 3,932
Australia 49.6 0.7 17.7 8.4 0.0 0.0 0.0 6.2 0.5 0.1 16.8 0.03 2,796
Nigeria 100.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.03 2,771
Top Ten Countries Total
25.4 18.4 19.5 8.6 7.3 0.0 4.0 1.5 1.2 0.3 13.9 0.82 82,127
99,870Total Deal Values
Chinese Completed M&As Abroad: Chinese Completed M&As Abroad: Primary Payment Method by Deal Value Primary Payment Method by Deal Value
January 1995 January 1995 -- June 2008June 2008
US$ Millions
Cash Only 92,993
Share Only2%
Cash & Shares
3%
3232
Share Only 1,544
Cash & Shares 2,539
Other 2,794
Total 99,870
Source: Dealogic.
Cash Only95%
Chinese Completed M&As Abroad: Chinese Completed M&As Abroad: Acquiror Ownership Status by Deal ValueAcquiror Ownership Status by Deal Value
January 1995 January 1995 -- June 2008June 2008
US$ Millions
Private (Not listed)
40,244
Public (Listed) 36,058
Other1%Government
(Not listed)23% Private
(Not listed)
3333
Public (Listed) 36,058
Government (Not listed)
22,580
Not applicable 971
Wholly-owned Subsidiary
10
Joint Venture 6
TotalTotal 99,870
Source: Dealogic.
Public (Listed)36%
23%(Not listed)
40%
Top 30 Chinese M&As Abroad by Deal ValueTop 30 Chinese M&As Abroad by Deal ValueJanuary 1995 January 1995 –– June 2008June 2008
US$ Millions
Completion Date
Acquiror TargetTarget
NationalityTarget
Industry
Cash Only (Y/N)
14,316 1-Feb-08Aluminum Corp of
China;Alcoa Inc
Rio Tinto plc (12%)United
KingdomMining Y
5,490 15-Feb-08Industrial &
Commercial Bank of Standard Bank
South Africa Finance Y
3434
5,490 15-Feb-08 Commercial Bank of China - ICBC
Standard Bank Group Ltd (20%)
South Africa Finance Y
4,180 26-Oct-05China National
Petroleum Corp -CNPC
PetroKazakhstan Inc
Kazakhstan Oil & Gas Y
3,652 10-Aug-06China Petroleum &
Chemical Corp -SINOPEC
Udmurtneft OAO (99.49%)
Russian Federation
Oil & Gas Y
3,425 15-Dec-06 Bank of China LtdSingapore Aircraft Leasing Enterprise
Pte Ltd (SALE)Singapore Transportation Y
Source: Dealogic.
Top 30 Chinese M&As Abroad by Deal ValueTop 30 Chinese M&As Abroad by Deal ValueJanuary 1995 January 1995 –– June 2008June 2008
US$ Millions
Completion Date
Acquiror TargetTarget
NationalityTarget
Industry
Cash Only (Y/N)
3,117 24-Mar-08China Huaneng
GroupTuas Power Ltd Singapore
Utility & Energy
Y
3,000 14-Aug-07China Investment Blackstone
United States Finance Y
3535
3,000 14-Aug-07Corp Group LP (10%)
United States Finance Y
2,981 14-Aug-07China Development
BankBarclays plc
(2.64%)United
KingdomFinance Y
2,935 4-Apr-08State
Administration of Foreign Exchange
Total SA (1.6%) France Oil & Gas Y
2,692 19-Apr-06China National
Offshore Oil Corp -CNOOC
Oil & Gas Assets (Akpo Offshore Oil & Gas Field
in Nigeria)
Nigeria Oil & Gas Y
Source: Dealogic.
Top 30 Chinese M&As Abroad by Deal ValueTop 30 Chinese M&As Abroad by Deal ValueJanuary 1995 January 1995 –– June 2008June 2008
US$ Millions
Completion Date
Acquiror TargetTarget
NationalityTarget
Industry
Cash Only (Y/N)
2,440 28-Nov-07Ping An Insurance
(Group) Co of China Ltd
Fortis Group (4.18%) Belgium Finance Y
2,106 29-Jan-97
China International Trust and
Investment Corp -China Light & Power Co
Ltd (20%)Hong Kong
Utility & Energy
Y
3636Source: Dealogic.
2,106 29-Jan-97Investment Corp -
CITICLtd (20%)
Hong KongEnergy
Y
2,044 15-Apr-08State
Administration of Foreign Exchange
BP plc (1%)United
KingdomOil & Gas Y
1,910 29-Dec-06 CITIC GroupOil & Gas Assets (Kazakh
Oil & Gas Assets)Kazakhstan Oil & Gas Y
1,750 2-May-05 Lenovo Group Ltd
International Business Machines Corp - IBM (Personal Computer
Business)
United States
Computers &
ElectronicsN
Top 30 Chinese M&As Abroad by Deal ValueTop 30 Chinese M&As Abroad by Deal ValueJanuary 1995 January 1995 –– June 2008June 2008
US$ Millions
Completion Date
Acquiror TargetTarget
NationalityTarget Industry
Cash Only (Y/N)
1,660 9-Feb-98China Telecom
Hong Kong (Group) Ltd
Hong Kong Telecommunications
Ltd (7.6%)Hong Kong Telecom. Y
1,420 21-Feb-06Andes Petroleum
Co
Oil & Gas Assets (Oil & Pipeline Interests
in Ecuador)Ecuador Oil & Gas Y
3737Source: Dealogic.
Coin Ecuador)
1,248 29-Dec-06China Construction Bank Corp - CCB
Bank of America (Asia) Ltd
Hong Kong Finance Y
1,200 29-Dec-07China Cosco
Holdings Co Ltd
Golden View Investment Ltd
(48.93%)Hong Kong Transportation Y
1,186 6-Jun-97China Telecom
(Hong Kong) Ltd
Hong Kong Telecommunications
Ltd (5.5%)Hong Kong Telecom. Y
Top 30 Chinese M&As Abroad by Deal ValueTop 30 Chinese M&As Abroad by Deal ValueJanuary 1995 January 1995 –– June 2008June 2008
US$ Millions
Completion Date
Acquiror TargetTarget
NationalityTarget
Industry
Cash Only (Y/N)
1,016 1-Apr-05China Network
Communications Group Corp
PCCW Ltd (20%) Hong Kong Telecom. Y
China Petroleum & Oil & Gas Assets (Oil Oil &
3838Source: Dealogic.
923 13-Jun-06China Petroleum &
Chemical Corp -SINOPEC
Oil & Gas Assets (Oil Blocks 17, 18 & 15 in
Angola)Angola
Oil & Gas
Y
850 21-Sep-06
China Petrochemical Corp;
Oil & Gas Technology Fund Inc
Omimex de Colombia Ltd (50%)
ColombiaOil & Gas
Y
796 11-Nov-06China Vision Resources
LtdAnglo American plc
(1.127%)United
KingdomMining Y
789 24-Jul-07Aluminum Corp of China
Ltd - CHALCOPeru Copper Inc
(90.03%)Canada Mining Y
Top 30 Chinese M&As Abroad by Deal ValueTop 30 Chinese M&As Abroad by Deal ValueJanuary 1995 January 1995 –– June 2008June 2008
US$ Millions
Completion Date
Acquiror TargetTarget
NationalityTarget
Industry
Cash Only (Y/N)
650 6-Sep-01
Beijing Orient Electronics Group
Co Ltd;Cando Corp
Hyundai Display Technology Inc -Hydis (80.1%)
South KoreaComputers
& Electronics
Y
697 18-Jul-00Huaneng Power
Shandong Huaneng Power Development Hong Kong
Utility & Y
3939Source: Dealogic.
697 18-Jul-00Huaneng Power International Inc
Power Development Co Ltd
Hong KongUtility & Energy
Y
625 28-Sep-06 Air China LtdCathay Pacific Airways Ltd
(9.14%)Hong Kong
Transportation
Y
592 22-Apr-02China National
Offshore Oil Corp (CNOOC)
Repsol YPF SA (Indonesian assets)
Indonesia Oil & Gas Y
582 28-Jan-08Industrial &
Commercial Bank of China - ICBC
Seng Heng Bank Ltd (79.933%)
Macao Finance Y
China's International Investment PositionChina's International Investment Position
US$ Billion 2006 2007 2006 2007
Net Position 611 1,022 B. Liabilities 1,033 1,266
A. Assets 1,644 2,288 1. Foreign Direct Investments 613 742
1.Direct Investments Abroad 91 108 2. Portfolio Investment 121 143
2. Portfolio Investment 229 240 2.1 Equity Securities 107 125
2.1 Equity Securities 2 19 2.2 Debt Securities 14 18
2.2 Debt Securities 228 221 3. Other Investments 300 381
Source: State Administration of Foreign Exchange.
3. Other Investments 252 406 3.1 Trade Credits 104 132
3.1 Trade Credits 116 142 3.2 Loans 99 103
3.2 Loans 67 89 3.3 Currency and Deposits 59 98
3.3 Currency and Deposits 47 50 3.4 Other Liabilities 38 47
3.4 Other Assets 21 126
4. Reserves Assets 1,073 1,535
4.1 Monetary Gold 4 5
4.2 Special Drawing Rights 1 1
4.3 Reserves Position in the Fund 1 1
4.4 Foreign Exchange 1,066 1,528
4040
Geographical Distribution of GDP and Financial Assets20062006
Public Private Total
World 48,434 5,092 50,827 25,781 43,420 69,201 74,435 194,463 401 100
European Union
13,658 253 13,069 7,693 15,499 23,192 37,736 73,997 542 38
United States 13,195 55 19,569 6,234 20,816 27,050 10,203 56,822 431 29
US$ BillionsBank Assets
Total Financial
Assets
Total Financial
Assets Share of
GDP
Total Financial
Assets Share of the
World
Debt SecuritiesGDPForeign
Exchange Reserves
Stock Market Capitalization
Source: International Monetary Fund.
United States 13,195 55 19,569 6,234 20,816 27,050 10,203 56,822 431 29
Japan 4,377 880 4,796 6,751 1,973 8,724 6,590 20,110 459 10
Emerging Asia 6,271 2,272 6,857 2,014 1,495 3,508 8,845 19,210 306 10
Emerging Latin America
2,953 311 1,454 1,100 475 1,575 1,551 4,580 155 2
Emerging Europe
2,760 606 1,873 640 111 750 1,214 3,837 139 2
Emerging Middle East
1,328 247 657 38 61 99 998 1,755 132 1
China 2,645 1,068 2,426 791 422 1,213 6,017 9,656 365 5
4141
Public Private Total
China 3,240 1,530 4,479 1,143 583 1,725 7,201 13,405 414
India 1,135 267 3,479 417 79 496 878 4,853 427
Bank Assets
Total Financial
Assets
Total Financial
Assets Share of
GDP
US$ BillionsDebt SecuritiesStock Market
Capitalization
Foreign Exchange Reserves
GDP
Distribution of GDP and Financial AssetsDistribution of GDP and Financial Assetsfor Selected Countries for Selected Countries
2007 2007
Source: International Monetary Fund.
India 1,135 267 3,479 417 79 496 878 4,853 427
Brazil 1,314 179 1,370 749 327 1,076 1,578 4,023 306
Russia 1,305 464 1,329 28 104 132 731 2,192 168
United States 13,841 60 19,922 6,594 23,564 30,158 13,898 63,978 462
Japan 4,380 953 4,664 7,148 2,102 9,251 10,287 24,202 553
Germany 3,178 44 2,105 1,721 4,084 5,805 6,164 14,074 443
United Kingdom 2,773 49 3,852 915 3,024 3,940 9,680 17,472 630
4242