Germany ranked as lowest risk country for China's investment

Germany was ranked as the lowest risk out of 26 countries that had the largest scope of China's foreign direct investment (FDI), Caixin.com reported on Tuesday.

The Institute of World Economics and Politics, Chinese Academy of Social Sciences (CASS) announced a report named Country Risk Ratings of Chinese Overseas Investment on Monday.

It shows that Germany was selected as the only top-rated AAA country with excellent economic and social indicators followed by Australia, Canada, France, Korea, America, Italy and the UK rating to AA. Five high risk countries, also, were disclosed by the report in ascending order: Cambodia, Vietnam, Mongolia, Angola and Sudan.

"We focus on the yield rate of China's FDI and the safety and security of overseas investment compared with other rating agencies that are mainly considered the sovereign credit ratings," Caixin.com quoted Zhang Ming, director of the Institute of World Economics and Politics, at CASS as saying.

The report pointed out that the risk assessment graded 26 countries, including G20 members and the main targets of China's FDI, which accounts for 60 percent of total outbound investment.

Five key indicators were equally-weighted in the risk assessment and divided into 37 sub-indexes. They are economic foundations, debt paying ability, resilient society, political risk and relations with China.

"Bilateral relationship with China is one of the important features of this report which refers to three sub-indexes: the Bilateral Investment Treaty, the levels of investment resistance and bilateral ties."

The result of the report disclosed that it was more proper to invest in developed countries because compared with emerging economies, they enjoyed low risks.

Also, the report estimated that the sluggish economies in developed nations will keep in the future, which will provide great opportunities for Chinese investors. Not only can Chinese enterprises purchase foreign assets at a low price, but also obtain high-end technologies.

Foreign direct investment in China grew steadily in the first 10 months of the year amid sweeping government reforms that are expected to reshape the world's second-largest economy.

FDI was up 5.77 percent year-on-year at $97.03 billion during the period, the Ministry of Commerce said on Tuesday.

"Several risks of China's overseas investment should be paid attention, including returns on investment, the security of investment, political risk and culture shock", Caixin.com quoted Wu Pin, Vice Director of Policy Research Department of the Chinese Ministry of Commerce, as saying.