Global fluctuations, uncertainties a risk for domestic firms: experts
Despite the sluggish economic growth predicted in the world market in 2017, China's outbound direct investment (ODI) is stable and moving in a positive direction, a Chinese official said Thursday.
The comment came after reports that China had made new record investments in the US, Europe and Australia in 2016, arousing attention from regulators in those countries, which have gradually tightened foreign investment regulations.
In 2017, China will encourage domestic firms that have the conditions and abilities [to go global] to conduct real and well-regulated foreign investment activities, such as taking part in the joint construction of the One Belt, One Road initiative, starting international cooperation on production capacity and getting involved in the global industrial chain and value chain, Sun Jiwen, spokesman of the Ministry of Commerce (MOFCOM) said at a press conference held in Beijing.
In 2016, China's ODI grew fast, which helped boost the country's economic development as well as industrial transformation and upgrading, Sun said.
"But at the same time, the global financial market recently experienced rising fluctuations, increasing uncertainties from some countries' and regions' economic policies and some developed country imposed more restriction barriers on Chinese investors, especially State-owned enterprises. All these factors put more risk and uncertainty on Chinese companies that seek to expand in overseas markets," Sun noted.
Domestic firms invested about 1.1 trillion yuan ($170 billion) in 164 countries and regions across the globe in 2016, an increase of 44.1 percent on a yearly basis, according to data released by the MOFCOM in January.
Uncertainties plague the global investment environment and pose many challenges for China in 2017, said Yang Quan, a professor with Department of International Economics and Business of Xiamen University.
Yang told the Global Times on Thursday that the world policy context is prone to largely change this year due to US President Donald Trump taking office. "To address such tough world circumstances, China is expected to create multilateral free trade zones and expand into other markets like Africa and South America" he said.
Yang forecast that, driven by the Belt and Road initiative, China is likely to increase its investment in Africa in the coming years.
Improving competitiveness
"China's overseas investment has gained scale in the past few years, but what matters is that the quality of investment has also improved," Bai Ming, a research fellow at the Chinese Academy of International Trade and Economic Cooperation, told the Global Times on Thursday.
It is normal for domestic companies to encounter investment barriers in world markets, but foreign countries and regions should not do whatever they want - they expect Chinese investment to drive local employment while they impose many restrictions on domestic capital, Bai noted.
Both China and foreign countries and regions should make the cake of cooperation bigger in a bid to realize mutual benefits, he said.
"What also needs to be noted is that Chinese firms must not just follow the trend [to go global], but focus on bolstering their weakness and enhancing their competitiveness," he said.
Sun also said that the Chinese government is stepping up efforts to advance facilitation of foreign investment as well as strengthen protection of ODI risks, aiming to promote the sound growth of overseas investment. "Joint efforts from the world are also needed to oppose protectionism," he said.
Further cooperation on Belt and Road initiative
China will continue to advance the construction of its One Belt, One Road initiative and further strengthen cooperation on primary projects with countries and regions along the routes, the Ministry of Commerce (MOFCOM) said Thursday.
China invested $14.53 billion in 53 countries and regions along the Belt and Road route in 2016, accounting for 8.5 percent of the country's total foreign investment during the same period, MOFCOM data showed.
Some Belt and Road projects, especially infrastructure ones, cost a large amount of capital, and take a long period for construction and getting back costs, but in a long run those projects play an active role in improving infrastructure and driving economic and social development in countries and regions along the initiative, according to the MOFCOM.
