Question

Direct foreign investment by China in other countries expanded rapidly for 10 years from 2007, but fell significantly in 2017. Discuss the reasons for the decline in 2017. Did the decline continue or was 2017 just a temporary downturn? From a Chinese perspective, what are the pros and cons of outbound DFI. Consider the acquisition in 2016 of GE Appliances acquired by Haier, a Chinese company. What are the advantages/disadvantages to both China and the U.S.? Has China invested in the United states and what type of investment?

Answer 1

Answer:

Quick economic development in the developing nations just as solid recuperation after the extraordinary fiscal crisis or emergency in the developed economies, and a continuous lull or slow down in financial development in the residential economy drove numerous Chinese speculators to scout for better investments openings over the world which caused a huge assembly in outside remote speculation or investment. Be that as it may, the easing back economy and worry in banking segment caused one of the greatest Chinese securities exchange crash in 2014 when numerous speculators pulled back their budgetary investments from China. This caused a huge fall in outside trade holds. A stale fare segment additionally caused to fall in remote trade holds or exchange reserves.

To stop further fall in remote trade reserves, the Chinese government put different limitations on outflowing of capital which prompted an enormous fall in outer investment from China to different nations in 2017. The new government guideline has just permitted outside remote investment in vital parts as indicated by the need of the Chinese economy and its goals. Prior the Chinese aggregates put resources into areas, for example, entertainment, extravagance real estate, sports and so forth. The outer investments in these segments are presently disheartened.

The decrease in outside flow of capital has pretty much remained steady according to the strategy of the Chinese government.

The advantages of outer speculations are earning opportunities in quickest developing divisions over the nations around the globe just as chance of catching of market share in the world. The disadvantages are that the Chinese economy is progressively incorporated as far as business cycles on the planet which could affect the outside trade holds or exchange reserves just as exchange rate contrarily prompting higher insecurity of the fiscal markets.

Chinese procurement of GE Appliances gives it points of interest, for example, more prominent share of the overall industry on the planet, particularly in the US, just as higher mechanical solutions. The US's disadvantage could be the loss of a significant private division organization which could have earned and put resources into the US. Presently, the profit earnings from GE Appliances activities in the US and the world could be repatriated back to China.

A Chinese lawful firm had declared in 2017 to put $200 million in Puerto Rico in building China-themed resorts and other such amusement facilities in the nation.