The Strategist

Investment is the new black for China's economy

02/13/2017 - 16:45

One of China's largest real estate developers, Dalian Wanda Group, is looking for European financial sector objects to acquire. Earlier media reported about negotiations with German Postbank, but the Chinese company has denied the information. However, observers are noting growing interest of Chinese conglomerates to the European financial market.

faungg's photos
faungg's photos
According to Financial Times’ sources, Chinese multi-conglomerate Dalian Wanda Group, owned by a retired colonel of the Chinese army and now billionaire Wang Jianlin, is looking for acquisition targets in the European financial industry. The Chinese company reportedly wants to diversify their operations and enter the European financial market. One of objects of potential interest is German Postbank. However, this morning, Dalian Wanda said it is not negotiating with Postbank.

Market observers note that Wanda Dalian Group’s vivid interest to new markets is not something unexpected. Once a small developer under government contracts, the company has grown into a multi-conglomerate, which assets include hotels, cinemas in the United States, amusement parks and even British yacht manufacturer Sunseeker International. Experts explain Dalian Wanda’s potential interest to expanding business by fact that the company has restructured its financial operations in the past year. Besides, the conglomerate hired ex-chairman of the Chinese bank China Guangfa Bank, which now develops financial operations of the entire group. November deal of another Chinese conglomerate, Shanghai Fosun, to acquire a majority stake of Portuguese bank Millenium BCP add clarity to Dalian Wanda Group’s new range of interest.

At the same time, experts note that European antitrust regulators could object European-Chinese acquisitions in the financial sphere. "Wanda’s chances for buying European banks are slim - said Hong Kong-based analyst of Sanford C. Bernstein to Bloomberg. – It will be difficult for Wanda to obtain consent of the European regulators, which typically do not let companies without their own developed financial transactions buy banks."

China is well-know not only for foreign, but also domestic investment. Latest edition of UNCTAD’s report "Global Investment Trend Monitor" notes that the country occupies third place among the top ten economies of the world to attract foreign capital, staying behind only the US and the UK. At the same time, China continues to optimize use of foreign investment structure and improve quality. Foreign investment flows in the services sector keep growing. This is especially true for high value-added services and hi-tech manufacturing sector. Foreign investments tend to favor investment in capital, high-tech manufacturing industry and high value-added sector, and continue to move away from labor-intensive industries.

UNCTAD predicts that in 2017 China's economic growth will be one of the world’s highest. As the country will continue modernization of industrial structure, market-oriented foreign investment is expected to keep growing. At the same time, continuous deepening of foreign capital management reform will allow China to gradually expand areas open to foreign investment. This will give a new impetus to inflow of foreign capital and China will remain one of the most attractive countries for foreign investment in 2017.