A big reason for its fast economic growth is that China has been a magnet for the world’s investment capital. Over the past two decades, China attracted more foreign direct investment (FDI) than any country save America. So the recent prediction made by the Centre for China and Globalisation, a Beijing think-tank, that this year China’s outbound investments would exceed its inbound ones, is noteworthy (see chart).
This is not—yet—because China is becoming less attractive to multinationals, which are squeezed by local rivals and targeted by overzealous regulators and the state media. Inward investment has topped $100 billion a year in the past five years. Rather, Chinese firms are increasingly venturing abroad. Earlier waves of investors were led by state-owned enterprises in search of resources in Africa and Latin America. Today’s pioneers are often private firms. They seek brands, talent and technology to bring back to the Chinese market.
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