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China's Global Investment Up

Chinese companies laid out US$2.9 billion in overseas direct investment last year, up 5.5 percent from the 2002 figure, according to the Statistical Communique of China on Overseas Direct Investment, jointly issued on Monday by the Ministry of Commerce and the National Bureau of Statistics.

By the end of 2003, the total amount of overseas direct investment by these companies reached US$33.2 billion.

It is the first time that China has issued such a communique, according to Jin Bosheng, a senior researcher at the Chinese Academy of International Trade and International Cooperation, and it suggests that the government intends to beef up supervision of overseas investment.

However, China's overseas direct investment still lags far behind developed countries, he noted. Figures from the communique indicate that direct investment of Chinese companies accounted for only 0.5 percent of the world's total.

State-owned firms took the lead, accounting for 43 percent of total overseas investment. Nearly half of all investment was placed in Asia.

Investment overseas has become a major way for Chinese enterprises to participate in global economic competition since China began to adopt a policy of opening more than 20 years ago," said Ministry of Commerce official Peng Nanfeng.

Wang Zhao, a senior researcher with the State Council's Development Research Center, pointed out that global investment could also help ease the pressure for the yuan to appreciate. "Besides pressure from the current account surplus, yuan appreciation pressure also comes from the large capital inflows."

The government should encourage domestic capital to "go out," he said.

Yang Zilin, president of the Export-Import Bank of China (China Exim Bank), believes that the time is basically ripe for domestic companies to go out. "After about two decades of development, the technical level of domestic companies has improved significantly."

Yang said his bank would not only provide more long-term credit with lower interest rates for Chinese companies in the next few years, but also help them explore more investment areas globally.

"Export and import banks in many foreign countries have placed increasing emphasis on supporting companies to invest in other countries, rather than supporting exports of commodities," Yang said.

China Exim Bank plans to expand loan services to Chinese companies that engage in processing trade or contract projects in foreign countries. "The bank would provide first priority credit for export of equipment, technology and raw materials, which are demanded by the overseas investment projects," said Yang.

The bank will also support Chinese companies engaged in project contracting, resource exploration and manufacturing in countries where the Chinese government provides preferential loans.

(China Daily September 7, 2004)


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