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China Anticipates 10% Increase in OFDI; Draft Five-Year Plan Links Outbound Investment with Economic Performance

China’s non-financial outward foreign direct investment (OFDI) will increase 10% in 2016, according to estimates in China’s National Development and Reform Commission’s Report on the Implementation of the 2015 Plan for National Economic and Social Development and on the 2016 Draft Plan for National Economic and Social Development, commonly referred to as the draft for China’s Thirteenth Five-Year Plan.

This projection means an estimated US$130 billion (C$173 billion) in outward investment will flow from China this year, up from US$118 billion in 2015. China had previously anticipated 2015’s OFDI to be US$113 billion, or 12% growth from 2014, but the actual increase was 14.7%. A year on year increase of 18.2% in investments into the Belt and Road Initiative was recorded last year, or US$14.8 billion. The Plan highlights increasing outbound investment and international cooperation in order to improve the performance of the economy and facilitating negotiations on investment agreements with the United States and the European Union in order to promote the steady growth and structural adjustment of foreign trade.

The Thirteenth Five-Year Plan outlines China’s priorities and targets for 2016 through 2020, and, with the importance both domestic and foreign investors place on China’s economy, the Plan is keenly examined. The Draft Plan highlights China’s continuing interest in investing in what it terms “innovation-driven development” and large-scale investments into areas that can produce economic growth.

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