Chinese Firms Step up Overseas Expansion: MOFTEC

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Last updated at: (Beijing Time) Monday, July 22, 2002

Chinese Firms Step up Overseas Expansion: MOFTEC

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China's overseas investments soared 149.2 per cent year-on-year to US$523 million in the first six months of the year, according to statistics from the Ministry of Foreign Trade and Economic Co-operation (MOFTEC).

An official with the MOFTEC's Foreign Economic Co-operation Department, who preferred to remain anonymous, attributed the huge increase to the Chinese Government's recently adopted strategy to encourage domestic companies to expand abroad.

China set up 148 non-financial companies overseas in the first half of the year, up 5 per cent from comparable months last year.

These projects involve a total of US$858 million contractual investments, a growth of 217.3 per cent from the same period last year.

Among these, 37 are processing trade companies, with total contractual investments of US$95.64 million and Chinese contractual input of US$71.49 million.

The trade official noted, besides setting up new plants and companies overseas, Chinese enterprises have started to purchase shares in overseas companies as a new form of transnational investment.

The majority of China's overseas investments are still put into processing and assembly projects, and the number of newly approved projects has steadily grown to 63 in the first half of the year, he said.

Countries and regions targeted for overseas investment are on the increase, with input into Asia, Africa and Latin America growing rapidly in the first half of the year. Investment in these areas made up more than 85 per cent of the country's overseas input from January to June.

The government is also paying great attention to domestic companies' contraction of overseas projects, and published a series of encouraging policies in recent years, including providing interest-free loans for contractors of overseas projects and setting up a fund to help small and medium-sized enterprises explore international markets, the trade official said.

China started to implement these policies this year, which has enabled business to grow rapidly.

Chinese companies completed overseas contracted projects of US$3.67 billion in the period, up 11.4 per cent year-on-year, and signed new project contracts worth US$5.62 billion, a yearly growth of 22.7 per cent, according to MOFTEC statistics.

Chinese senior leaders' visits to other countries and regions, and the improved international environment after China's entry into the World Trade Organization also helped Chinese companies sign and carry out project contracts overseas, said the official.

He said, in the past few years, a large number of Chinese companies have learned to take part in international competition and bid for large projects in line with the need to develop themselves and the trend of economic globalization.

But China's export of labour services dropped 6.3 per cent year-on-year to US$1.3 billion in the first half of the year, and newly signed contracts of labour exports dropped 25.3 per cent year-on-year to US$1.26 billion in the period, MOFTEC statistics revealed.

The official said major importers of Chinese labourers, including Singapore, South Korea and Japan, are in economic recession, reducing the demand for external labour services, to the point of stopping altogether due to their problems with rising unemployment at home.

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