Re­turns ris­ing from man­u­fac­tur­ing ODI

China Daily (Hong Kong) - - TOP NEWS - By ZHONG NAN zhong­nan@chi­nadaily.com.cn

The re­turns earned by Chi­nese com­pa­nies from in­vest­ments in over­seas man­u­fac­tur­ing this year are es­ti­mated to have risen by 19.8 per­cent year-on-year, to $225 bil­lion, ac­cord­ing to a se­nior of­fi­cial.

Zhang Ji, the as­sis­tant min­is­ter of com­merce, said as more out­bound di­rect in­vest­ment has flowed into man­u­fac­tur­ing sec­tors, such as au­to­mo­biles, ce­ment and cloth­ing, com­pa­nies have found new growth points and built in­dus­trial chains.

“Their in­vest­ment can ef­fec­tively drive trade growth,” Zhang said at an eco­nomic fo­rum held by the China Cen­ter for In­ter­na­tional Eco­nomic Ex­changes on Satur­day. “We’ve also dis­cov­ered an al­ter­na­tive ben­e­fit: Part of the coun­try’s gross do­mes­tic prod­uct has been trans­formed into gross na­tional prod­uct.”

The ODI from the non­fi­nan­cial sec­tor stood at $161.7 bil­lion in the first 11 months of this year, up by 55.3 per­cent year-on-year, the min­istry’s data show.

Over the same pe­riod, Chi­nese com­pa­nies com­pleted 561 merger and ac­qui­si­tion deals over­seas, with $82.4 bil­lion, or 30 per­cent, of the to­tal in­vest­ment go­ing into man­u­fac­tur­ing busi­nesses.

“The in­vest­ment cat­e­gories of Chi­nese com­pa­nies have fur­ther ex­panded over­seas. High-end man­u­fac­tur­ing, in­for­ma­tion trans­mis­sion and soft­ware tech­nol­ogy ser­vices were hot ar­eas for ODI this year,” said Zhang Xiao­qiang, vice-chair­man of the China Cen­ter for In­ter­na­tional Eco­nomic Ex­changes.

The ma­jor in­vest­ment des­ti­na­tions have been As­so­ci­a­tion of South­east Asian Na­tions mem­bers, Aus­tralia, the Euro­pean Union, Rus­sia and the United States, he said, adding that coun­tries along the Belt and Road Ini­tia­tive are also hot des­ti­na­tions.

The ini­tia­tive is a trade, ser­vices and in­fra­struc­ture net­work that in­cludes the Silk Road Eco­nomic Belt and 21st Cen­tury Mar­itime Silk Road, cov­er­ing about 4.4 bil­lion peo­ple in more than 60 coun­tries and re­gions in Asia, Europe and Africa.

“We have also wel­comed com­pa­nies from the US and Ja­pan to form part­ner­ships with Chi­nese com­pa­nies to de­velop mar­kets along these two trad­ing routes,” Zhang Xiao­qiang added.

To en­hance its earn­ing abil­ity, China has built 56 eco- nomic and trade co­op­er­a­tion zones in over 20 coun­tries and re­gions, in­clud­ing Sri Lanka, Pak­istan and South­east Asia. By Septem­ber, the ef­forts had cre­ated 160,000 jobs.

More than 100 coun­tries and in­ter­na­tional or­ga­ni­za­tions are in­volved in the Belt and Road Ini­tia­tive. China has signed co­op­er­a­tion agree­ments with more than 40 coun­tries and re­gions along the routes, and has started to co­op­er­ate on in­ter­na­tional in­dus­trial ca­pac­ity with more than 20 coun­tries, data from Zhang Xiao­qiang’s cen­ter show.

“Chi­nese com­pa­nies need to fur­ther ab­sorb qual­ity re­sources from global brands through over­seas M&A ac­tiv­i­ties and build core strengths in mar­ket pop­u­lar­ity, tech­nol­ogy and tal­ent rather than low-end man­u­fac­tur­ing,” said Lin Gui­jun, a pro­fes­sor at the Univer­sity of In­ter­na­tional Busi­ness and Eco­nom­ics in Bei­jing.

es­ti­mated re­turns earned by Chi­nese com­pa­nies from in­vest­ment in man­u­fac­tur­ing over­seas this year

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