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Outbound Investment Increasing

The China Outbound Investment Statistics Report, jointly issued by the Ministry of Commerce and the National Bureau of Statistics, gives an overview of the movement in the Chinese mainland. Following are excerpts from the report:

The outbound FDI of Chinese mainland companies reached US$2.85 billion last year, up 5.5 percent year-on-year. The number brought the mainland's total overseas investment to US$33.2 billion by the end of 2003.

According to the 2003 World Investment Report issued by the United Nations Conference on Trade and Development (UNCTAD), the annual international flow of FDI stood at US$647 billion with the Chinese mainland accounting for 0.45 percent. The accumulated world FDI was US$6.866 trillion with the Chinese mainland representing 0.48 percent.

With its growing economic power increasingly driving it to target overseas markets for investment opportunities, the Chinese mainland is expected to become the world's fifth largest outward foreign direct investor this year, according to the UNCTAD 2004 forecast, displacing Japan.

According to the UNCTAD 2004 report, the United States remains far and away the world's biggest foreign direct investor, followed by Germany, Britain and France.

About investors

Some 3,439 mainland enterprises had established 7,470 companies in 139 countries or regions by the end of last year.

Ownership of the investors has been diversified while State-owned enterprises are still the majority, representing 43 percent of registered investors.

Limited liability companies, shareholding companies and private companies account for 22 percent, 11 percent and 10 percent respectively.

Some 41 percent of the investors chose Hong Kong, the United States, Japan and Germany. Hong Kong boasts the highest rate of 21 percent.

Companies in manufacturing and wholesale and retail business are the largest investors.

Most of these investors pour their money into industries abroad like manufacturing, wholesale and retail, commercial services and construction, which have low investment thresholds.

Specifically, 27 percent of the investors run manufacturing businesses, 10 percent wholesale and retail, 14 percent commercial services and 11 percent construction.

FDI in 2003

Half of annual investments went to Asia, in particular, Hong Kong.

The total investment to Asia reached US$1.5 billion. Hong Kong grabbed US$1.15 billion, followed by South Korea, Thailand, Macao, Indonesia and Cambodia.

Some US$1.04 billion flowed into Latin America, accounting for 36.5 percent of the year's total.

An amount of US$150 million was invested in Europe, mostly in Denmark, Russia and Germany, representing 5.3 percent.

Africa got 2.6 percent, US$75 million, of China's outbound investment in 2003. Nigeria, Mauritius and South Africa were the main receipts.

North America had US$58 million, or 2 percent, almost all going to the United States.

Australia and New Zealand shared the US$34 million to Oceania, or 1.1 percent of China's outward investment in 2003.

Some 18 percent of the yearly investments went to mergers and acquisitions, 14 percent by buying stocks and 35 percent by reinvestment of profits.

Beijing is the largest regional investor in 2003, followed by other coastal regions such as Guangdong, Shandong, Fujian, Zhejiang and Jiangsu provinces and Shanghai.

Some 48.4 percent of the annual investment in 2003, or US$1.38 billion, were put into the mining sector, mainly for exploration of oil and gas.

And US$620 million, or 21.8 percent of the money was invested in manufacturing, mostly in telecommunications equipment, computers and other electronic equipment, textiles and metallurgy.

Wholesale and retail business accounted for 12.6 percent of the annual investment, namely, US$360 million.

Some 9.8 percent, or US$280 million, went to the commercial services industry.

Private investment represented 1.5 percent, or US$42 million of the yearly investment in 2003.

The central government implemented the "go-out" strategy in recent years and encourages all kinds of ownerships to invest abroad, rather than limit themselves to State-owned enterprise.

The Ministry of Commerce and the State Administration of Foreign Exchange have dramatically reduced the approval procedures for companies who want to invest abroad and only have required the approval of local foreign trade authorities beginning this year. Private investment will get a boost in the future.

Accumulated FDI

Some 80 percent of the mainland's FDI stocks, or US$26.56 billion, were in Asia. In Hong Kong, mainland enterprises' investments amounted to US$24.6 billion by the end of 2003, accounting for 74 percent of the mainland's outbound investment.

Latin America had US$4.62 billion, or 14 percent of the total investment.

Some 1.7 percent, or US$550 million, went to North America, mostly to the United States.

The Europe, Africa and Oceania represented for 1.6 percent, 1.5 percent and 1.4 percent of the accumulated investment respectively.

By industry, information transmission, computer services and software received 32.8 percent of the total outbound investment.

Wholesale and retail business ranked second, accounting for 19.7 percent or US$6.53 billion.

Mining and manufacturing industry followed, with investments of US$5.9 billion and US$2.07 billion respectively.

Guangdong Province invested a total of US$1.4 billion by the end of 2003. Shanghai and Beijing followed with US$928 million and US$448 million.

(China Daily October 22, 2004)

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