The Chinese investment in Spain 95% collapsed in 2019. The flow of capital from the Asian giant has suffered sharp cuts as a result of capital restrictions by the Beijing Government and greater regulation in Europe and the US for investment control, according to consulting analysts Baker MacKenzie. The second round effect of this situation may be that the flow of money benefits research and development in China and cement the growth of the giant's economy and the rest of Asian countries in the coming years. Especially, Indonesia and India.
Chinese investments in Spain reached a modest figure of 80 million dollars in 2019, according to Baker MacKenzie calculations. In 2018 that figure was 1,170 million. The evolution of Chinese investments in Spain in recent years shows an evolution in the form of saw teeth. Thus, in 2016, the investment figure amounted to about 1.8 billion, to fall the next year to just 450 million euros.
By 2020 the growth prospects for Chinese investment in Spain are more promising, according to the study. The announced operation of sale of a stake of Aldesa by the China Railway company will contribute. Aldesa is a Spanish firm in the infrastructure sector valued at 250 million euros.
Change of course
If international trade tensions diminish, experts expect Chinese money to look abroad again. The Central Bank of China has recently signaled its determination to increase liquidity and reduce borrowing costs for companies in 2020, cutting the amount of cash they should keep in reserve, which will encourage Chinese investors to seek investments outside of its borders
Globally, the Chinese mergers and acquisitions announced in 2019 totaled 57,000 million dollars, 29% less than the 80,000 million in 2018, showing the lowest level in six years. According to Baker McKenzie's report, this significant slowdown in mergers and acquisitions abroad in China is part of a global context of declining mergers and acquisitions.
With the exception of Latin America, all regions of the world experienced a significant decrease in Chinese investment activity in 2019 compared to 2018. Chinese investment in Europe fell by 40% and in North America 27% in 2019 reaching a total of 18.9 billion dollars, the lowest figure since 2010 and 83% less than the maximums set in 2017 where Chinese companies invested 107 billion dollars.
The US Foreign Investment Committee (CFIUS) forced a series of divestments related to previously closed transactions. These
they included the sale of iCarbonX stakes in PatientsLikeMe, the sale of Grindr by Beijing Kunlun Tech and the sale by Cosco of the participation of a subsidiary in the Long Beach Container Terminal. CFIUS is also reviewing Chinese participation in the TikTok application, an agreement carried out over two years ago. On the other hand, the biggest deal canceled in Europe was the failed offer of China Three Gorges valued at $ 10.3 billion for Portugal's largest public utility, Energias de Portugal, due to political concerns. Another relevant transaction canceled was Fosun's proposal to contribute another 562 million dollars to its investment in the UK travel agency Thomas Cook (for a 75% stake in its tour operator business and 25% of its business of airlines). The bailout plan was not carried out due to the resistance of the creditors, although Fosun acquired the Thomas Cook brand and the related intellectual property.
The lowest level since 2013
Chinese investment in Europe also declined further than in 2018, completing operations worth $ 13.4 billion in 2019, which represents the lowest level since 2013. The main operations included the acquisition by Amer de Anta Sports for 5,200 million dollars, the additional investment of 2,200 million dollars of Shagang Group in Global Switch, the acquisition of a 51% stake of Evergrande in NEVS for 930 million dollars, the acquisition of World First UK by Alibaba valued at 700 million dollars and the acquisition of Candy by Qingdao Haier for 547 million dollars.
The main recipient countries of Chinese investment in Europe in 2019 were Finland (acquisition of Anta by Amer), United Kingdom (additional investment of Jiangsu Shagang in Global Switch), Sweden (acquisition of Evergrande of a 51% stake in NEVS), Germany and Italy Finland recorded the highest year-on-year growth in 2019. Meanwhile, Chinese investment in France declined from $ 1.8 billion in 2018 to less than $ 100 million in 2019. Chinese investment in Germany also declined from $ 2.5 billion in 2018 to only 700 million dollars in 2019.
Baker McKenzie experts see reasons for a certain optimism since there are a number of variables – beyond the signing of the first phase of the trade agreement between the US and China – that show hopeful changes that could boost China's foreign investment by returning to a modest growth of it for 2020. As Maite Díez, M&A partner of Baker McKenzie points out, "growth can come hand in hand with a number of relevant factors such as the increase in Chinese investment appetite, given that liquidity conditions in China's economy has improved slightly over the past year, or the implementation of new rules for evaluating foreign investments in the US and Europe, and the effort to reform China's domestic regime for receiving foreign investment could help to alleviate the concerns of foreign investors about the lack of reciprocity when looking for opportunities in the market of the Asian country. "
. (tagsToTranslate) China (t) Commerce