Chi­nese in­vest­ment seeks win-win progress

At a time when the global econ­omy is in the dol­drums, many eyes are on China, the world’s sec­ond largest econ­omy and soon-to-be one of the big­gest cross-bor­der in­vestors, for growth op­por­tu­nity.

Malta Independent - - NEWS - Mr Jiang Jiang is China’s am­bas­sador to Malta Jiang Jiang

De­spite mod­er­a­tion of growth, China re­mains one of the fastest-grow­ing and most re­silient ma­jor economies in the world. Its GDP grew by 6.7% in the first half of this year, 2.8 times of the worl%d av­er­age, con­tribut­ing 26% to global growth. Reg­is­tered ur­ban un­em­ploy­ment rate has stayed around 5%. House­hold in­come in­creased by 6.5%, while the in­come gap be­tween ur­ban and ru­ral res­i­dents has been fur­ther re­duced. The fun­da­men­tals of the Chi­nese econ­omy are proven to be strong, leav­ing suf­fi­cient lat­i­tude for Chi­nese pol­i­cy­mak­ers to re­spond ef­fec­tively to po­ten­tial head­winds fac­ing the econ­omy.

The on­go­ing re­forms in China de­signed to carry the econ­omy steadily through a tough tran­si­tion to­ward more sus­tain­able and qual­ity growth are pro­duc­ing good re­sults. A cen­tral com­po­nent of those re­forms is sup­ply-side struc­tural re­form. The goal is to trans­form China’s econ­omy into one driven by in­no­va­tion and con­sump­tion and make it health­ier and more ef­fi­cient. Ini­tial progress has been achieved in cut­ting over-ca­pac­ity, re­duc­ing in­ven­tory, delever­ag­ing, low­er­ing costs and strength­en­ing weak links. Fig­ures in Q1 and Q2 show that pro­duc­tion of the top six en­ergy-in­ten­sive in­dus­tries is on de­cline, and over-ca­pac­ity of crude steel and coal were cut by 13.85 mil­lion tons and 72.27 mil­lion tons re­spec­tively. China’s in­dus­trial struc­ture has im­proved sig­nif­i­cantly, with the ser­vices sec­tor over­tak­ing the man­u­fac­tur­ing sec­tor and ac­count­ing for 54.1% of GDP. Hi-tech and equip­ment man­u­fac­tur­ing in­dus­tries grew by 10% and 8% re­spec­tively. There is no doubt that the struc­tural re­forms tak­ing place in China will up­grade its econ­omy and send a mes­sage of hope and op­por­tu­nity to the world.

For over a decade, China has been ac­tively pur­su­ing closer eco­nomic ties with other coun­tries un­der the “win-win strat­egy of open­ing-up”, a pol­icy frame­work to as­sure the world that China will be­come more open eco­nom­i­cally and seek co­op­er­a­tion which ben­e­fits both sides. Fol­low­ing its ac­ces­sion to the WTO, China launched the “Go Global” strat­egy in 2001. Since then, over­seas in­vest­ment by Chi­nese busi­nesses has grown more than 20 folds. By the end of the first half of 2016, Chi­nese non-fi­nan­cial over­seas direct in­vest­ment to­taled US$ 88.86 bil­lion, an in­crease of 58.7% year on year, go­ing into more di­verse sec­tors. New for­eign pro­ject con­tracts to­taled 99.69 bil­lion US dol­lars, an in­crease of 15% year on year, of which 51.6% are signed with 61 coun­tries along the Silk Road Eco­nomic Belt and the 21st Cen­tury Mar­itime Silk Road, known as the Belt and Road Ini­tia­tive, an in­crease of 37% com­pared with the year be­fore. Data from Dealogic, an in­ter­na­tional fi­nan­cial data sup­plier, shows that China has risen to No.1 in global cross-bor­der merg­ers and ac­qui­si­tions with 30% of the in­ter­na­tional M&A deals from Jan­uary to March this year.

Ac­cord­ing to the 2015 Re­port on the Sus­tain­able Devel­op­ment of Chi­nese En­ter­prises Over­seas jointly re­leased by the United Na­tions Devel­op­ment Pro­gram and two Chi­nese think tanks, Chi­nese en­ter­prises’ “go­ing global” has given a huge boost to economies world­wide. Chi­nese in­vest­ment is wel­comed by the re­cip­i­ent coun­tries, be­cause it brings not only busi­ness op­por­tu­ni­ties, but also im­proved liveli­hood to lo­cal com­mu­ni­ties. By re­ceiv­ing Chi­nese in­vest­ment, for­eign coun­tries have the re­sources to bridge fi­nanc­ing gaps, up­grade in­fra­struc­ture, cre­ate new jobs and thus bet­ter grow their econ­omy. Ac­cord­ing to Qian Kem­ing, Vice-Min­is­ter of Com­merce of China, in 2014, Chi­nese com­pa­nies paid US$19.15 bil­lion worth of tax to their host coun­tries and hired 833,000 staff lo­cally. For host coun­tries, Chi­nese in­vest­ment means op­por­tu­nity, not chal­lenge. The Belt and Road Ini­tia­tive is yet an­other ef­fort cham­pi­oned by China to boost global busi­ness co­op­er­a­tion. Since it was launched three years ago, the ini­tia­tive has gained enor­mous trac­tion. Op­por­tu­ni­ties are pour­ing in to not just China, but all coun­tries along the routes and open to the ini­tia­tive. More than 70 coun­tries and or­ga­ni­za­tions have joined the ini­tia­tive. Bi­lat­eral trade be­tween China and par­tic­i­pat­ing coun­tries has topped one tril­lion US dol­lars. China’s direct in­vest­ment in 49 par­tic­i­pat­ing coun­tries is near 15 bil­lion US dol­lars, an 18% in­crease yearon-year. China has signed pro­duc­tion ca­pac­ity co­op­er­a­tion agree­ments with 20 par­tic­i­pat­ing coun­tries, and set up 46 over­seas co­op­er­a­tion zones with 17 par­tic­i­pat­ing coun­tries, which brought 60,000 lo­cal jobs.

As friendly coun­tries, China and Malta have had fruit­ful co­op­er­a­tion over the years. The No.6 Dry Dock built in the 1970s is a show­case of a friend in need and was called a “trea­sure trove” by the Mal­tese, and the Mediter­ranean Tra­di­tional Chi­nese Medicine Cen­ter has of­fered treat­ment to more than 140,000 lo­cal peo­ple. In re­cent years, some of China’s lead­ing com­pa­nies, e.g. Shang­hai Elec­tric Power and Huawei have ei­ther en­tered the Mal­tese mar­ket or are hav­ing dis­cus­sions with Mal­tese coun­ter­parts. With their state-of-the-art tech­nol­ogy, they want to be Malta’s part­ners in job cre­ation, in­dus­trial up­grad­ing and en­vi­ron­men­tal pro­tec­tion.

The Belt and Road Ini­tia­tive has of­fered broad prospects for co­op­er­a­tion be­tween China and Malta. We will en­cour­age more Chi­nese en­ter­prises to come to Malta and seek mu­tu­ally-ben­e­fi­cial co­op­er­a­tion op­por­tu­ni­ties with their lo­cal part­ners. This will serve the need and in­ter­ests of both sides and bring about a truly win-win sit­u­a­tion.

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