Overseas investment still ranked behind foreign direct investment
Although there are more and more Chinese investing directly overseas, these investment are still very likely being less than foreign direct investment (FDI) this year, government officials and experts said on July 1.
Recently, foreign banks and other organization forecast that ODI (overseas direct investment) would exceed FDI. However, government officials suggested that it is unlikely to happen soon, especially this year. It is partly because Chinalco’s $19.5 billion didn’t succeed to save Rio Tinto last month, which is the world’s third largest mining enterprise.
Although Chinese National Petroleum Corp, working together with British energy giant BP, got the chance to develop Iraq’s biggest oilfield on Tuesday, it is still unlikely to raise dramatically ODI in 2009 because the past several months’ deals are made up of the large quantity of small volume.
A press conference in the morning of July 2 was hold by the Ministry of Commerce at the 13th China International Fair for Investment and Trade. ODI prospects are expected to be discussed at this fair.
“Although there are rising cases of ODI, the volume is still decreasing. This is because lots of cases are mall,” said Chen Rongkai, a division director at the Ministry of Commerce.
During January to March, ODI cases increase by 7% to 445, but the volume was down by a lot, said Caijing magazine. Ministry officials who did not reveal the figures told that to the magazine. We will soon see the first-half ODI.
The officials said the government would stage policies to stimulate ODI to seize the opportunities coming from the economic crisis.
In June, the government said it would cancel the curbs in foreign exchange from Aug 1 on companies that want to invest abroad with up to $30 billion expected to flow overseas.
In March, the commerce ministry said local governments had been increasing powers for supporting ODI.
“More measures will be carried out to encourage Chinese ODI,” Chen said.
Because of the financial crisis, many foreign companies want to sell assets and Chinese companies want to expand overseas. Many people forecast a increasing of ODI. They anticipated that it could even outpace the FDI, which has shrunk for 8 consecutive months. The trend would continue until early in 2010.
Standard Chartered Bank said in April that Chinese ODI could reach $150-180 billion this year, much larger than the FDI ($80-100).
Compared to last year, Chinese ODI almost doubled from 52.1 billion, while FDI was $92.4 billion.
Li Jianfeng, macro-economy analyst at Shanghai Securities, said: “ODI would not easily surpass FDI even though the FDI is not growing at present. ODI growth will be slow. ”
At the same time, protectionist and national security barriers will make it difficult for Chinese companies to plan large scale overseas investment, said industry insiders.
Li Jianfeng pointed out that ODI brings benefits to reduce the growing pressure of china due to the increasing foreign exchange reserves and to internationalize the yuan.
Are you interested in the business opportunities in China?
China is one of the world’s great growth markets and is likely to be for many years to come. Foreign companies often face difficulties in assessing Chinese market demand and enacting effective strategies because of the language barriers, culture differences, and high expense.
BPOVIA is the leading virtual assistant and Knowledge process outsourcing (KPO) service provider in China. BPOVIA is the only virtual assistant company ever been nominated for the prestigious “Red Herring 100 Asia” Awards 2008. Combines international perspective with local know-how, BPOVIA can provide our clients China business development service and help our clients doing successful business in China.
Please visit http://www.BPOVIA.com/ for details about our service.
Popularity: 1% [?]