Forbes China has released its first overseas investment “risk list” for Chinese investors. Like all risk rankings, they gauged things like regional political stability, government corruption, legal system factors, and indicators of social stability and economic opportunities. Whether the Chinese follow these risk assessments is another thing entirely.
Lowest Risk for Investment:
Highest Risk for Investment:
民主刚果 (The Democratic Republic of the Congo)
In 2011, China invested over $1 trillion in over 13,000 companies spread throughout 177 countries. As of 2009, almost half of China’s foreign investment (not including Hong Kong) was in the lowest risk countries, while about 15% were in highest risk counties.
The incentives to enter a high-risk country can be quite strong. Not only are there usually vast untapped resources, but competition in the country and the region is extremely low. China’s presence in Africa has grown quickly in the past years due to these factors, and to very loud criticism by the West.
But those investments, no matter how tempting, have very clear consequences (just look at China’s experience in Libya.) Ultimately Chinese companies are still largely very poor judges of investment risk, according to Forbes.
China beats out World Bank as biggest lender to Africa