'Benefits outweigh concerns' on Chinese M&A abroad: HSBC

BEIJING - HSBC has poured cold water on foreign fears about increasing Chinese mergers and acquisitions (M&A) abroad, saying the investment will be mutually beneficial.

China's non-financial outbound direct investment (ODI) surged 71.8 percent year on year to hit 195.97 billion yuan ($29.92 billion) in the first two months of 2016, according to official data.

Many foreign observers claim the investment will make countries economically dependent on China and create unfair competition.

While HSBC acknowledged in a research note that the ODI will lead to "new challenges," it said "the benefits will outweigh concerns."

Although China's ODI is growing rapidly, the investment only began recently and is growing from a very low base. ODI still accounted for only 12 percent of the country's total stock of foreign assets, HSBC noted.

The bank said Chinese investment along the Belt and Road will bring the receiving countries much-needed financing, while also helping to provide China with income to pay for the imports it is increasingly demanding.

"Seen in this light, the increased diversification of China's outbound M&A across countries and industries, as well as greater private sector participation, should be good news for long-term sustainability of the Belt and Road," according to the report.

It concluded, "The acceleration of China's M&A will create new challenges. However, there are good economic reasons behind what we think will be a long-term trend, and we expect it to become an important channel for both the globalization of China's capital and the Belt and Road Initiative."