China Inward and Outward Investment Development Report 2016 9780367192815, 9780429201585

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China Inward and Outward Investment Development Report 2016

China Inward and Outward Investment Development Report 2016 gathers facts about two-way investment of China and its local regions, providing a wealth of information for a comprehensive understanding of the country’s two-way investment development.

The BRI Inward and Outward Investment Series

China Inward and Outward Investment Development Report 2016 gathers facts about two-way investment of China and its local regions, providing a wealth of information for a comprehensive understanding of the country’s two-way investment development. China’s Two-Way Investment Policy Guide (2016) comprises the latest policies pertinent to promotion of international production capacity and equipment-­ manufacturing cooperation, displaying China’s new opening-up policies and investment orientations to domestic and international investors. The Belt and Road and International Cooperation in Industrial Capacity: Industrial Layout Study conducts analysis on China’s advantageous surplus capacity of various industries and measures for optimizing their overseas layout with experience on production capacity cooperation of home and abroad, providing a wealth of information for a thorough understanding on relevant areas to domestic and foreign investors. The Belt and Road and International Production Capacity Cooperation: Local Development Breakthroughs interprets relevant measures, experience and achievements of international production capacity cooperation in various provinces and cities. The Belt and Road and International Production Capacity Cooperation: Survival Strategies of Companies collects typical cases of companies’ participation in international production capacity cooperation, and studies problems of overseas investment of the companies. The Belt and Road and Industrial Cooperation in Industrial Capacity: Countryby-Country provides research reports on international production capacity and equipment manufacturing cooperation of major countries, providing a better understanding on the destination country’s information and its market trend, facilitating decision-making for both domestic and foreign investors.

China Inward and Outward Investment Development Report 2016 Edited by Xu Shaoshi Deputy Co-edited by He Lifeng, Ning Jizhe, Wang Xiaotao

First published 2020 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 52 Vanderbilt Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2020 selection and editorial matter, Xu Shaoshi, He Lifeng, Ning Jizhe and Wang Xiaotao; individual chapters, the contributors The right of Xu Shaoshi, He Lifeng, Ning Jizhe and Wang Xiaotao to be identified as the authors of the editorial material, and of the authors for their individual chapters, has been asserted in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data A catalog record has been requested for this book ISBN: 978-0-367-19281-5 (hbk) ISBN: 978-0-429-20158-5 (ebk) Typeset in Times New Roman by Wearset Ltd., Boldon, Tyne and Wear

Contents

Editorial boardvii Prefaceviii Editor’s notes xiii PART I

Development overview

1

1

China inward and outward investment analysis report 20153 (I) Foreign investment in China  3 (II) Outward investment of China  23

2

Regional inward and outward investment analysis report 201563 (I) East China  63 (II) Central China  158 (III) West China  187 (IV) Northeast China  250

PART II

Basic data

269

3

Global direct investment271 (I) FDI flows by region and economy, 2010–2015  271 (II) FDI stocks by region and economy in 2000, 2010 and 2015  282

4

Inward and outward investment of China288 (I) Actual utilization of foreign capital  288 (II) Outward foreign direct investment of China  292

vi  Contents 5

Inward and outward investment of China by region310 (I) Foreign investment  310 (II) Outward investment  311

6

Inward and outward investment of China by industry316 (I) Foreign investment  316 (II) Outward investment  318

PART III

Milestones 7

321

Investment milestones in 2015323 Index345

Editorial board

Editor-in-chief of the Series: Xu Shaoshi Deputy Editor-in-chief of the Series: He Lifeng, Ning Ji Zhe, Wang Xiaotao Editorial Board Members (sorted by stroke of surname): Ma Xin, Wang Fu, Wang Dongguang, Wang Hanchun, Wang Hongbin, Wang Zhonglin, Tian Fuying, Tian Jinchen, Qiao Xiaolin, Hua Bitian, Liu Wen, Liu Ying, Liu Jianxing, Liu Hongkuan, Tang Zi, An Guiwu, Su Wei, Yang Yang, Yang Hongbo, Xiao Shengbin, Wu Zhongqiong, Wu Haikun, He Zhonghua, Yu Jing, Song Qun, Song Gongmei, Song Huayou, Song Gangxin, Chen Yongjiu, Chen Zhenning, Ou Xiaoli, Zhou Xiaofei, Zhao Jianjun, Qin Ke, Gu Qiang, Gu Dawei, Chai Lineng, Huang Fangfang, Cao Wenlian, Liang Wenyue, Han Qingdong, Cheng Zeye, Zeng Song, Xie Jianhui Executive Editor of Series: Cao Wenlian and Song Qun Executive Deputy Editor of Series: Song Gongmei and Liu Jianxing Editorial Team of the Series (sorted by stroke of surname): Wang Ran, Wang Yang, Wang, Xijun, Wang Surong, Wang Shangen, Wei Wenfeng, Fang Hao, Yin Li, Kong Meng, Deng Guangrong Fu Yanchen, Yin Hongliang, Feng Yan, Bi Ronghua, Liu Zhe, Liu Jiajie, Sun Xuezhen, Su Chuang, Li Peng, Li Xin, Li Zhongyi, Li Jianshu, Li Fengxu, Li Zixi, Li Tanqiu, Yang Liu, Wu Chengtian, Wu Zhenjuan, Zhang Wenchao, Zhang Wenkui, Zhang Huanteng, Chen Kexian, Shao Jianhua, Lin Shufeng, Hang Youfei, Zhou Jingang, Zhao Xinyue, Hao Sihuan, Jing Jiaxin, Hu Jun, Hu Shuguo, Duan Ya, Yuan Gang, Mo Lingcong, Xu Yan, Xu Jiaming, Gao Xintao, Guo Qifeng, Huang Rui, Cao Yang, Han Biao, Jiao Xueli, Zeng Yu, Xie Ennian, Lan Dixi Tan Ning, Pan Jinan, Xue Yi Authors of this volume: Jiao Xueli, Chang Hao, Li Xiaojuan, Wang Yue

Preface

Opening to the outside world is a fundamental policy of China and the only way for a country to prosper. As is well proven in China as well as elsewhere, opening brings progress while isolation leads to backwardness. The communiqué of the Fifth Plenary Session of the 18th CPC Central Committee regards opening-up as an important component of the five development ideas, pointing out that “to stay oriented to openness and development, we must go with the trend of closer economic integration into the world economy and pursue a win-win strategy of opening-up, and develop an open economy at a higher level.” The Outline of the 13th Five-Year Plan for National Economic and Social Development of the People’s Republic of China proposes that during the 13th Five-Year Plan period, efforts need to be made to “comprehensively advance bidirectional opening-up, facilitate the orderly flow of domestic and international factors of production, the efficient allocation of domestic and international resources, and the deep integration of Chinese and foreign markets, and work faster in cultivating new international competitive edges.” Promoting two-way opening-up, especially in terms of bilateral investment, and constantly boosting the utilization of foreign capital and Chinese investments abroad is an important part of the efforts toward all-round opening-up in the new era. In 2015, China’s economy maintained a medium-high growth rate of 6.9% despite the general downturn of the world economy, making its due contribution to the growth of the world economy. China’s inward and outward investment, which fared satisfactorily, exhibited six new features. 1. Both foreign investments in China and Chinese investments abroad are the second largest in the world. For the first time, China’s rapidly growing direct investments abroad exceed investment inflows into the country. In 2015, the amount of foreign investment actually used in China was US$135.577 billion, up 5.51% from 2014 – a growth rate 1.8 percentage points higher than in 2014. Meanwhile, China’s direct investment abroad was US$145.67 billion, up 18.3% from 2014 – a growth rate 4.1 percentage points higher than in 2014. Experiencing the thirteenth consecutive year of growth, China’s direct investment abroad was now 54 times higher than in 2002, representing an average annual growth rate of 35.9%. In 2015, ranking second in

Preface  ix direct investment outflows (after the United States) and third in foreign investment inflows, China registered a net capital outflow of US$10.07 billion, becoming the net exporter of capital for the first time. During the 12th Five-Year Plan period (2011–2015), China received 1.5 times more foreign investment and invested 2.4 times more abroad than in the previous five-year period, indicating a new stage in terms of its openness and capacity of international development. 2. While service has become a key area of China’s inward and outward investment, there emerges a new trend that among all the sectors, China’s tertiary industry receives a higher proportion of foreign investment while the secondary industry is an increasing focus for Chinese investment abroad. In 2015, the ratio between foreign investments in China’s three industries was 1.13: 32.16: 66.71. Compared with 2014, the proportion was 0.05 and 2.04 percentage points lower for the primary and secondary industries, and 2.09 percentage points higher for the tertiary industry. The industries receiving the largest foreign investment are, in sequence, manufacturing, real estate, finance, and wholesale and retail, accounting for 77.34% of the total foreign investment in China. That China’s industrial structure varies in almost the same way as the sectoral composition of foreign investment shows the important role of foreign investment in promoting the upgrading of the industrial structure. In 2015, China’s outward foreign direct investment (OFDI) covered 18 major categories of economic activities, and the amount of OFDI in the three industries of the economy stood in a ratio of 1.74: 27.5: 70.76. Compared with 2014, the OFDI in primary and secondary industries increased by 0.44 and 2.2 percentage points respectively, while the amount in the tertiary industry dropped by 2.64 percentage points. The top sectors for investors, in descending order of investment, were manufacturing, which received US$19.99 billion, a year-on-year increase of 108.5%, with US$10.05 billion going to the equipment manufacturing, accounting for 50.3% of the manufacturing sector; finance, with an investment of US$24.25 billion, up 52.3% year-on-year; information transmission software and information services, with an investment of US$6.82 billion, up 115.2% year-on-year. 3. Hong Kong remains the largest and most stable source and destination for investment in and from the Chinese Mainland, and differentiation emerges as a new feature of two-way investment between China and the developed economies. In 2015, the sources of inward investment in the Chinese Mainland and the destinations of its outward direct investment were mainly in Asia, accounting for 82.32% and 74.4% of the investment inflows and outflows. The investment from and into Hong Kong accounted for 63.7% and 61.7% respectively, at basically the same level as in 2014. In 2015, while the number of business investors from the United States and 15 EU countries grew by 5.53% and 11.9%, respectively, the value of investment from the United States fell 11.8% from a year earlier and investment from the EU grew by 3.55%. In 2015, China’s direct investment grew only 5.7% in the United

x  Preface States, while investment in the European Union and Australia fell 44% and 16%, respectively, well below the double-digit growth rate of the same period last year. This shows that although China participates more closely in international division of labor, cooperation and competition in high-end industries due to its increasing economic strength and improving performance of Chinese enterprises, the increasing political, market and environmental risks have become an important factor affecting the steady rise of China’s outward investment. 4. While east China remains the most important region in both the country’s inward and outward investment, the west and the central regions have played an increasingly important role. In 2015, east China was still a focus in China’s inward and outward investment landscape. The region hosted 88.41% of all the foreign-funded companies in China and received 78.09% of the investment inflows. By contrast, the central region reported only about 7.04% and 7.7%, and the western region 4.52% and 7.34%. Despite the low shares, some central and western provinces have fared well in this regard. For example, in central China’s Anhui Province and Hunan Province, the foreign capital received was US$13.62 billion and US$11.56 billion respectively, up 10.4% and 12.7% respectively; OFDIs of the two provinces rose 1.1 times and 55.9% to US$970 million and US$1.48 billion respectively, both of which were significantly higher than the national average. In western China’s Yunnan Province and Xinjiang Uygur Autonomous Region, the foreign capital utilized was US$2.99 billion and US$450 million, an increase of 10.6% and 8.5% respectively; and OFDI rose by 30.4% and 37% to US$1.344 billion and US$1.102 billion respectively, both growth rates well above the national average. This shows that the development of the central and western regions proposed in the Belt and Road Initiative (BRI) has gradually become China’s new economic growth pole. 5. The diversification of investors and investment methods has become a prominent feature of China’s inward and outward investment. In 2015, wholly foreign-owned enterprises, Sino-foreign joint ventures, partnership and joint-stock entities became the main forms of enterprises using foreign capital in China. Among them, 90% were wholly foreign-owned and Sino-foreign joint ventures. In 2015, China’s outward investment was made mainly by the limited liability companies, while diversified investors also included private enterprises, joint-stock enterprises, individuals and collective entities. China’s stateowned enterprises accounted for 50.4% of FDI outflows, down 3.2 percentage points from the same period in 2014, while private-sector enterprises accounted for 49.6%, indicating their growing importance in the go-global drive. At the same time, China’s outward investment also takes diversified forms including M&A, equity investment, earnings reinvestment and debt investment. 6. Two-way investment between China and other countries along the Belt and Road has entered a new stage, and international cooperation in industrial capacity and equipment manufacturing has become a new focus in China’s outward investment.

Preface  xi In 2015, Chinese enterprises made direct investment in 49 BRI-related countries, with a total worth of US$18.93 billion, an increase of 38.6% year-on-year. These countries mainly included Singapore, Russia, Indonesia, United Arab Emirates, India, Turkey, Vietnam, Laos, Malaysia and Cambodia. In 60 BRI-related countries, Chinese enterprises have signed 3,987 project contracts with a total worth of US$92.64 billion, accounting for 44.1% of all the foreign project contracts China had signed in the same period, representing a year-on-year growth of 7.4%; the turnover achieved was US$69.26 billion, accounting for 45% of the total, up 7.6% year-on-year. In 2015, businesses from the countries along the Belt and Road set up 2,164 operations in China, an increase of 18.32% over the same period of 2014; the amount of foreign investment actually used was US$7.789 billion, up 25.34% over the same period of 2014 and much higher than the national level in the same period. This fully shows how the BRI has offered great opportunities and driven the robust growth of China’s investment in countries along the Belt and Road. In 2015, China’s outward direct investment in transportation, electricity, communications and other industries where it had a competitive edge totaled US$11.66 billion, up 80.2% year-on-year. By the end of 2015, there were 75 overseas economic cooperation zones being promoted by Chinese enterprises, of which more than half were processing and manufacturing parks closely related to capacity cooperation, with a cumulative investment of US$7.05 billion. Those economic cooperation zones were home to 1,209 enterprises. Together they produced US$42.09 billion of products, and paid US$1.42 billion in taxes and other levies to the host countries, which has led to the transfer of excess capacity of traditionally advanced industries such as textile, clothing, light industry and household appliances. Overseas investment and contracting work led to the rapid growth of equipment exports, and the revenue from the export of large-scale complete sets of equipment increased by more than 10% year-on-year. Through international capacity cooperation, Chinese enterprises optimize the distribution of their operations around the globe, bring domestic equipment, technology, services, technical standards and brands to other countries, and promote the adjustment and optimization of China’s economic structure. This shows that China’s efforts to promote international capacity and equipment manufacturing cooperation continues to show results and that international capacity and equipment manufacturing cooperation is becoming a new highlight in China’s outward investment. Despite the achievements, we should be clearly aware that there are still many problems in China’s inward and outward investment. In terms of inward investment, China should further improve the investment environment, improve the effectiveness and efficiency of foreign investment utilized, attract and guide foreign investment to better serve the transformation of China’s economic growth mode and industrial structure upgrading. In terms of outward investment, investing abroad is relatively new for Chinese enterprises, who thus still need more experiences. Such risk factors as politics, economy, market, culture, diplomacy and human resources in the wide range of host countries around the world would increase the uncertainty and difficulty of the outward investments of Chinese enterprises. Moreover, many new situations and problems may arise in

xii  Preface the future, and it is particularly important for Chinese investors to strengthen the understanding of the national conditions, laws and markets of the host countries and constantly accumulate experience. Only by strengthening the ability of international operations can they better adapt to the new developments in outward investment. The BRI Inward and Outward Investment Series, commissioned by the International Cooperation Center of the National Development and Reform Commission, contains investment information and guide to promote China’s inward and outward investment. The main features of the series are as follows: first, it provides an account of China’s inward and outward investment at the national and local level in 2015, and helps readers better understand developments in China’s inward and outward investment; second, it brings together the latest policies concerning international cooperation in industrial capacity and equipment manufacturing, and shows investors the new developments in China’s opening-up and investment policies; third, it contains key country reports on international industrial capacity and equipment manufacturing cooperation, and helps investors deeply understand the conditions of the host countries, grasp the market trends and make investment decisions; fourth, it provides case studies of international capacity and equipment manufacturing cooperation at the local and corporate level, as well as key industry research reports, to provide systematic and multifaceted information for investors. I believe the series of books will provide readers with a comprehensive picture of China’s inward and outward investment landscape, better promote the construction of the Belt and Road, promote healthy and orderly development of international capacity and equipment manufacturing cooperation, improve the international operations of Chinese enterprises and boost the economic and trade ties between China and other countries. Xu Shaoshi Former Director of the National Development and Reform Commission

Editor’s notes

In order to strengthen the overall guidance and service for inward and outward investment and better provide policy and other information for Chinese enterprises investing abroad and for transnational corporations investing in China, with the support and guidance of the leadership of the National Development and Reform Commission (NDRC), the International Cooperation Center has developed the BRI Inward and Outward Investment Series (hereinafter referred to as “the Series”). The Series aims to promote the Belt and Road Initiative (BRI) and China’s inward and outward investment. It consists of six books: China’s Inward and Outward Investment Report 2016, China’s Inward and Outward Investment Policy Guide 2016, BRI and International Cooperation in Industrial Capacity: Industry Layout Research, BRI and International Cooperation in Industrial Capacity: Respond to Local Development Challenges, BRI and International Cooperation in Industrial Capacity: Enterprises’ Survival Strategy, and BRI and International Cooperation in Industrial Capacity: Country Cooperation Guide. We hope these books serve as a practical guide that meets the needs of readers for communication and cooperation. This Series took eight months to complete. The editors collected and analyzed a large amount of information through interviews, surveys, requests for articles, and online research. In this process, the editorial team received generous support from the NDRC departments including General Office, the Department of Foreign Capital and Overseas Investment, the Department of Western Region Development and the Department of International Cooperation. Development and reform commissions of various provinces (autonomous regions, municipalities) supply us with a wealth of information. We gratefully acknowledge the generous support of the departments of the Ministry of Commerce (MOFCOM) – General Office, the Foreign Investment Administration and the Outward Investment and Economic Cooperation – and would like to thank foreign embassies in China for their invaluable assistance. Finally, thanks also go to China Machine Press for facilitating the publication of the Series.

xiv  Editor’s notes

Director, NDRC International Cooperation Center Executive Editor of the BRI Inward and Outward Investment Series

Part I

Development overview

1 China inward and outward investment analysis report 2015

(I)  Foreign investment in China 1 Overview In recent years, despite great fluctuations in global foreign direct investment (FDI), China’s utilization of foreign capital has basically maintained steady growth. The number of foreign direct investment projects registered 34,000 in 2002, more than 40,000 each year from 2003 to 2006, around 27,000 per year from 2008 to 2011, about 23,000 in 2013, approximately 24,000 in 2014, and 27,000 in 2015, an increase of about 11% from 2014. The amount of foreign investment actually used increased from US$52.743 billion in 2002 to US$135.577 billion in 2015. This represents an increase of 5.51% from US$128.502 billion in 2014. In 2015, foreign-invested enterprises used US$95.285 billion of foreign investment, accounting for 70.28% of the total and up by 0.58% from 2014; Sino-foreign equity joint ventures used US$25.885 billion of foreign investment, accounting for 19.09% of the total and up by 18.86% from 2014; Sino-foreign contractual joint ventures used US$1.845 billion of foreign investment, accounting for 1.36% of the total (see Table 1.1). Table 1.1  Foreign direct investment in 2015, by investor type Investment type

Total Wholly foreign-owned enterprise Equity joint venture Joint stock enterprise with foreign investment Contractual joint venture Other

Number of enterprises

Amount of foreign investment actually used

Number

Share (%)

Amount (US$100 million)

Share (%)

26,584 20,398 5,989 78

100 76.73 22.53 0.29

1,355.77 952.85 258.85 32.51

100 70.28 19.09 2.40

110 9

0.41 0.03

18.45 93.10

1.36 6.87

Source: Foreign investment statistics of the Ministry of Commerce of China.

4  Development overview Table 1.2 Statistics of accumulative foreign direct investment from 1979 to 2015, by type of investment Enterprise type

Total Wholly foreign-owned enterprise Sino-foreign equity joint venture Sino-foreign contractual joint venture Joint stock enterprise with foreign investment Other

Number of enterprises

Amount of foreign capital used

Number

Share (%)

Amount (US$100 million)

Share (%)

836,595 458,125 316,803 60,662

100 54.76 37.87 7.25

17,409.06 10,669.30 4,383.28 1,100.07

100 61.29 25.18 6.32

591

0.07

186.48

1.07

414

0.05

1,069.93

6.14

Source: Statistics of foreign investment of the Ministry of Commerce of China.

From 1979 to the end of 2015, foreign investors invested in 836,595 enterprises in China, with a total foreign capital of US$1,740.906 billion. Specifically, 458,125 enterprises, or 54.76% of the total, were wholly foreign-owned with US$1,066.93 billion of foreign capital utilized, 61.29% of the total; 316,803 enterprises, or 37.87% of the total, were equity joint ventures with US$438.328 billion of foreign capital used, accounting for 25.18% of the total; 60,662 enterprises, or 7.25% of the total, were contractual joint ventures with US$110.007 billion of foreign investment, accounting for 6.32% of the total (see Table 1.2). From 1992 to 2014, the tax revenue from foreign-invested enterprises increased year-on-year from RMB12.226 billion in 1992 to RMB2,492.06 billion in 2014, up by 10.39% from 2013. Its share in the total national tax revenue increased from 3.96% to 21.42%. In 2015, the tax revenue from foreigninvested enterprises amounted to RMB2,481.72 billion, down by 0.41% from 2014, accounting for 19.87% of the national tax revenue (see Table 1.3). 2  Investment sources In terms of the sources of foreign investment in China, in 2015, 20,399 enterprises in China received investment from 10 Asian countries/regions (the Hong Kong SAR, Indonesia, Japan, the Macao SAR, Malaysia, the Philippines, Singapore, the Republic of Korea (ROK), Thailand and Taiwan, China), registering a year-onyear growth of 12.61% and accounting for 76.73% of the total. The amount of actual foreign investment from these countries/regions amounted to US$103.613 billion, up by 5.35% year-on-year and accounting for 76.42% of the total. The number of US-invested enterprises in China saw a year-on-year rise of 5.53% to 1,241, while the actual amount of investment declined by 11.89% from 2014 to US$2.089 billion. Fifteen EU countries invested in 1,612 enterprises in China, up

China investment analysis report 2015  5 Table 1.3 Foreign-related tax revenue (mainly tax revenue from foreign direct investment), 1992–2015 Year

National tax revenue (RMB100 million)

Increase (%)

Total amount of Increase foreign-related tax (%) (RMB100 million)

Share in the national tax revenue (%)

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

3,084.16 3,998.83 4,854.20 5,746.21 6,607.98 7,914.55 8,949.76 10,120.35 11,831.03 14,460.86 16,932.18 19,094.18 23,121.91 27,712.37 33,662.57 44,189.40 52,453.84 58,037.78 71,182.96 87,179.27 97,830.35 107,900.09 116,331.90 124,892.00

– 29.66 21.39 18.38 15.00 19.77 13.08 13.08 16.90 22.23 17.09 12.77 21.09 19.85 21.47 31.27 18.70 10.65 22.65 22.47 12.22 10.29 7.81 7.36

122.26 226.56 402.64 604.46 764.06 993.00 1,230.00 1,648.86 2,217.00 2,883.00 3,487.00 4,268.00 5,355.00 6,391.34 7,976.94 9,972.60 12,118.93 13,615.22 16,389.91 19,638.10 21,768.81 22,574.93 24,920.60 24,817.20

3.96 5.67 8.29 10.52 11.56 12.55 13.74 16.29 18.74 19.94 20.59 22.35 23.16 23.06 23.70 22.57 23.10 23.46 23.03 22.53 22.25 20.92 21.42 19.87

– 85.31 77.72 50.12 26.40 29.96 23.87 34.05 34.46 30.04 20.95 22.40 25.47 19.35 24.81 25.02 21.52 12.35 20.38 19.82 10.85 3.7 10.39 –0.41

Source: Statistics of foreign investment of the Ministry of Commerce of China. Note Tax revenue from foreign-invested enterprises accounted for more than 98% of foreign-related tax revenue. Tariffs and land charges were excluded.

11.79% year-on-year, and the actual input of foreign capital amounted to US$6.396 billion, representing an increase of 3.55% from 2014. In 2015, the top 10 source countries/regions of investment in China (as per the actual input of foreign capital) were the Hong Kong SAR (US$86.387 billion), the British Virgin Islands (US$7.388 billion), Singapore (US$6.904 billion), the ROK (US$4.034 billion), Japan (US$3.195 billion), the United States (US$2.089 billion), Samoa (US$1.991 billion), Germany (US$1.556 billion), Taiwan, China (US$1.537 billion) and the Cayman Islands (US$1.444 billion). The actual input of foreign capital (US$116.525 billion) of the top 10 countries/regions accounted for 85.95% of the total foreign capital in actual use in China. The data above includes relevant country’s investment in China through free ports such as the British Virgin Islands, Samoa and the Cayman Islands.

6  Development overview Table 1.4  Statistics of top 15 countries/regions with investment in China in 2015 Country/region

Total Hong Kong SAR British Virgin Islands Singapore Republic of Korea (ROK) Japan United States Samoa Germany Taiwan, China Cayman Islands France Macao SAR Netherlands Bermuda Luxembourg Other

Number of enterprises

Amount of foreign investment actually used

Number

Share (%)

Amount (US$100 million)

Share (%)

26,584 13,146 373 762 1,958 643 1,241 340 425 2,962 112 208 566 121 9 26 3,692

100 49.45 1.40 2.87 7.37 2.42 4.67 1.28 1.60 11.14 0.42 0.78 2.13 0.46 0.03 0.10 13.89

1,355.77 863.87 73.88 69.04 40.34 31.95 20.89 19.91 15.56 15.37 14.44 12.24 8.85 7.52 7.10 6.30 148.51

100 63.72 5.45 5.09 2.98 2.36 1.54 1.47 1.15 1.13 1.07 0.90 0.65 0.55 0.52 0.46 10.95

Free ports, such as Mauritius, Barbados, the Cayman Islands, the British Virgin Islands and Samoa, invested in 850 enterprises in China, 3.20% of the total, with an actual investment of US$11.208 billion, accounting for 8.27% of the total. Other countries invested in 2,104 enterprises in China, accounting for 7.91% of the total, with an actual investment of US$12.046 billion, or 8.89% of the total. In terms of the source countries/regions of investment, the actual investment in 2015 of the top 15 countries/regions totaled US$120.727 billion, accounting for 89.05% of the total amount of foreign investment actually used in China in the year. The top 15 countries (regions) in terms of actual investment in China in 2015 were the Hong Kong SAR, the British Virgin Islands, Singapore, the ROK, Japan, the United States, Samoa, Germany, Taiwan of China, the Cayman Islands, France, the Macao SAR, the Netherlands, Bermuda and Luxembourg (see Table 1.4 and Figure 1.1). (1)  Hong Kong SAR The Hong Kong SAR is a major source of foreign direct investment (FDI). In 2015, the FDI outflow from the Hong Kong SAR reached US$55.143 billion, accounting for 3.74% of the global total FDI outflow (US$1,474.242 billion), down 126.88% from 2014. The Hong Kong SAR has been the largest and most stable source of investment in the Chinese Mainland and remained in the top in terms of both the number of enterprises it invests in and the amount of investment. From 1979 to 2015, the

China investment analysis report 2015  7

Figure 1.1 Top 15 countries and regions in actual investment in China in 2015 (unit: US$100 million).

number of enterprises established in the Chinese Mainland with investment from the Hong Kong SAR totaled 386,213, actually using US$833.325 billion of foreign investment, accounting for 47.87% of the total. In 2015, the Hong Kong SAR made direct investment in 13,146 enterprises in the Chinese Mainland, 49.45% of the total. The actual amount of investment from the Hong Kong SAR in 2015 stood at US$86.387 billion, representing 63.72% of the total, up by 3.78% from 2014. (2)  British Virgin Islands The British Virgin Islands (BVI) is an important free port for FDI in the world. In 2015, the investment from BVI to China amounted to US$7.388 billion, making up 5.45% of the FDI absorbed by China. As of 2015, BVI invested in 25,583 enterprises in China, accounting for 3.06% of the foreign-invested enterprises in China, with an accumulative actual amount of investment of US$149.174 billion, representing 8.57% of the total. In 2015, BVI invested in 373 enterprises in China, accounting for 1.40% of the total, with an actual investment of US$7.388 billion, accounting for 5.45% of the total. (3) Singapore In 2015, Singapore’s global outward investment fell by 10.27% from 2014 to US$35.485 billion, accounting for 2.41% of the global total FDI flow (US$1,474.242 billion). Its investment in China in the same year amounted to

8  Development overview US$6.904 billion, accounting for 5.09% of the FDI absorbed by China and 19.46% of Singapore’s total outward investment. In 2015, the number of enterprises in China with direct investment from S ­ ingapore rose by 0.66% from 2014 to 762, constituting 2.87% of the total. ­Singapore’s actual investment in China in 2015 increased by 15.6%. As of 2015, Singaporeinvested enterprises in China totaled 22,481, accounting for 2.69% of the total, with an actual investment of US$79.221 billion, making up 4.55% of the total. (4)  Republic of Korea In 2015, FDI outflow from the ROK totaled US$27.64 billion. The country’s investment in China in the same year stood at US$4.034 billion, accounting for 2.98% of the FDI absorbed by China and 14.59% of the ROK’s outward investment. In 2015, the ROK invested in 1,958 enterprises in China, accounting for 7.37% of the total and representing a year-on-year increase of 20.43%. Its actual investment in China in 2015 rose slightly by 1.69% from US$3.966 billion in 2014. As of 2015, the ROK invested in 59,740 enterprises in China, with a total actual investment of US$59.946 billion. The number of ROK-invested enterprises in China dropped from 4,008, or 11.7% of the total, in 2002, to 1,958 in 2015, or 7.37% of the total. Its actual investment rose from US$2.72 billion, or 5.2% of the total, in 2002 to the peak level of US$6.25 billion, or 10.3% of the total, in 2004, then fell year by year to US$3.04 billion (2.7% of the total) in 2012. Its actual investment in 2013 rose slightly from 2012 and reached US$3.054 billion, accounting for 2.46% of the total. From 2013 to 2015, its actual investment increased year by year, and reached US$4.034 billion in 2015, accounting for 2.98% of the total. (5) Japan Japan is an important FDI source in the world. In 2015, Japan’s FDI outflow totaled US$128.654 billion, up by 11.71% from 2014, accounting for 8.73% of the global FDI outflow. As of 2015, Japan invested in 49,840 enterprises in China, accounting for 5.96% of the total. Its accumulative actual investment in China amounted to US$101.825 billion, accounting for 5.85% of the total. In 2015, Japan invested in 643 enterprises in China, down 15.31% from 2014. Its actual investment in China in 2015 was US$3.195 billion, down 26.13% year-on-year. In 2015, the enterprises in China with investment from Japan accounted for 2.42% of the foreigninvested enterprises in China. Its actual investment in China in the same year was US$3.195 billion, 2.36% of the total. (6)  United States The United States is the world’s largest FDI source. Its FDI outflow in 2015 amounted to US$299.969 billion, down by 5.53% year-on-year, accounting for 20.35% of the global total.

China investment analysis report 2015  9 In 2015, the U.S. invested in 1,241 enterprises in China, accounting for 4.67% of the total, up 5.24% year-on-year. Its actual investment in China in 2015 reached US$2.089 billion, accounting for 1.54% of the total, down 13.50% from 2014, accounting for 0.70% of its total outward investment. As of 2015, the United States invested in 65,847 companies in China, with an accumulated actual investment of US$77.47 billion. The share of U.S. investment in the total inflow of foreign investment in China was declining. The number of US-invested enterprises dropped from 3,363 (9.84% of the total) in 2002 to 1,176 (4.94% of the total) in 2014. Its actual investment fell from US$5.424 billion (10.28% of the total) in 2002 to US$2.089 billion (1.54% of the total) in 2015. (7) Samoa Samoa is a free port. In 2015, it invested in 340 enterprises in China, accounting for 1.28% of the total, and its actual investment amounted to US$1.991 billion, or 1.47% of the total. As of 2015, Samoa-invested enterprises in China totaled 8,120, accounting for 0.97% of the total, and its actual investment stood at US$25.341 billion, or 1.46% of the total. (8) Germany Germany is one of the major FDI sources in the world. In 2015, the FDI outflow from Germany was US$94.313 billion, showing a year-on-year decline of 12.65% and accounting for 6.40% of the global FDI outflow. In 2015, the investment of Germany in China amounted to US$1.556 billion, accounting for 1.15% of the FDI absorbed by China and 1.65% of Germany’s outward investment. In 2015, Germany invested in 425 enterprises in China, accounting for 1.60% of the total, and its investment amount was US$1.556 billion, accounting for 1.15% of the total. Judging from the actual investment amount, Germany’s investment in China has been fluctuating in recent years. In 2012, Germany’s actual investment in China rose by 28.9% year-on-year to US$1.45 billion, saw a further growth of 30.22% from 2012 to 2013, and did not have obvious change in 2014. In 2015, its investment in China dropped significantly by 33.10% from the US$2.071 billion of 2014. In terms of the number of investment projects, Germany’s direct investment projects in China decreased slightly by 8.52% from 458 in 2011 to 419 in 2012, and further dropped to 373 in 2013, down 10.98% year-on-year. The number of investment projects of Germany in China rose slightly by 2.86% from 2013 to 2014 and increased remarkably by 9.65% year-on-year in 2015. As of 2015, Germany-invested enterprises in China totaled 9,002, accounting for 1.08% of the total. Its accumulated investment in China by 2015 amounted to US$25.466 billion, accounting for 1.46% of the total.

10  Development overview (9)  Taiwan, China The FDI outflow from Taiwan in 2015 was US$14.773 billion, up 13.96% yearon-year, accounting for about 1.00% of the global FDI outflow. In 2015, 2,962 enterprises in the Chinese Mainland received direct investment from Taiwan, up by 21.74% year-on-year. The actual investment in the Chinese Mainland from Taiwan in 2015 was US$1.537 billion, declining by 31.29% from 2014. As of 2015, Taiwan-invested enterprises in the Chinese Mainland totaled 95,298, with a total actual investment of US$62.689 billion, showing a downward trend. The number of Taiwan-invested enterprises in the Chinese Mainland dropped from 4,853 (14.20% of the total) in 2002 to 2,017 (8.84% of the total) in 2013. The number of Taiwan-invested enterprises increased continuously in 2014 and 2015, reaching 2,318 and 2,962 respectively, accounting for 9.74% and 11.14% of the total respectively. Its actual investment in the Chinese Mainland fell from US$3.971 billion (7.53% of the total) in 2002 to US$2,088 billion (1.68% of the total) in 2013, then to US$2.018 billion (1.57% of the total) in 2014 and US$1.537 billion (1.13% of the total) in 2015. Compared with 2014, the number of Taiwan-invested enterprises increased in 2015, but the amount of investment decreased. (10)  Cayman Islands The Cayman Islands is also a free port. It invested in 112 enterprises in China in 2015, accounting for 0.42% of the total. Its actual investment in China in 2015 stood at US$1.444 billion, or 1.07% of the total. As of 2015, the enterprises in China with investment from the Cayman Islands totaled 3,168, accounting for 0.38% of the total; its accumulated actual investment in China was US$30.172 billion, accounting for 1.73% of the total. (11)  Investment of BRI countries in China In 2015, BRI countries invested in 2,164 enterprises in China, showing an increase of 18.32% over 2014. The foreign investment in actual use relating to these enterprises amounted to US$7.789 billion, up 25.34% over 2014. Data in (1)–(11) above are from World Investment Report 2016 and statistics of foreign investment of the Ministry of Commerce of China. 3  Destination regions East China has always been a major destination of foreign investment in China, while foreign investment is comparatively less in Central and West China. In 2015, the number of foreign-invested enterprises in East China accounted for 88.41% of the total. The amount of foreign investment actually used in East China accounted for 78.09% of the total foreign investment absorbed by China.

China investment analysis report 2015  11 Table 1.5  FDI in East, Central and West China in 2015 Region

Total East Central West Relevant authorities

Number of enterprises 26,584 23,502 1,872 1,201 9

Share (%)

100 88.41 7.04 4.52 0.03

Amount of investment actually used (US$ million) 1,355.77 1,058.68 104.44 99.55 93.10

Share (%)

100 78.09 7.70 7.34 6.87

Source: Statistics of foreign investment of the Ministry of Commerce of China. Notes East China includes Beijing, Tianjin, Hebei, Liaoning, Shanghai, Jiangsu, Zhejiang, Fujian, Shandong, Guangdong and Hainan. Central China includes Shanxi, Jilin, Heilongjiang, Anhui, Jiangxi, Henan, Hubei and Hunan. West China includes Inner Mongolia, Guangxi, Sichuan, Chongqing, Guizhou, Yunnan, Shaanxi, Gansu, Qinghai, Ningxia, Xinjiang and Tibet. Data of relevant authorities include data of FDI absorbed by banking, securities and insurance industries.

The shares were 7.04% and 7.70% for Central China and 4.52% and 7.34% for West China. There were 23,502 foreign-invested enterprises in East China in 2015, up 12.92% from 2014. The amount of foreign investment actually used in East China in 2015 was US$105.868 billion, up 7.51% from 2014. In Central China, the number of foreign-invested enterprises and the amount of investment both showed a downward trend, while West China saw an increase in the number of foreign-invested enterprises but a downward trend in the amount of foreign investment actually used. In Central China, the number of foreign-invested enterprises stood at 1,872, down 17.95% from 2014, and the amount of foreign investment actually used reached US$10.444 billion, a year-on-year decline of 3.99%. In West China, the number of foreign-invested enterprises amounted to 1,201, up 6.58% year-on-year, and the amount of foreign investment actually used was US$9.955 billion, down 8.28% from 2014 (see Table 1.5). By the end of 2015, the number of foreign-invested enterprises and the amount of foreign investment actually used in East China accounted for 83.74% and 80.37% respectively of the accumulated number of foreign-invested enterprises and the amount of foreign investment actually used in China. The shares were 10.45% and 7.69% for Central China and 5.78% and 6.28% for West China (see Table 1.6). 4  Recipient industries In 2015, the top three industries in terms of the number of foreign-invested enterprises in China were the wholesale and retail industry (9,156 foreign-invested enterprises, 34.44% of the total), the manufacturing industry (4,507 foreign-invested

12  Development overview Table 1.6  FDI in East, Central and West China as of 2015 Region

Number of enterprises

Share (%)

Amount of foreign investment actually used (US$100 million)

Share (%)

Total East China Central China West China Relevant authorities

836,595 700,587 87,443 48,374 191

100 83.74 10.45 5.78 0.02

17,409.06 13,991.19 1,338.86 1,093.14 985.87

100 80.37 7.69 6.28 5.66

Source: Statistics of foreign investment of the Ministry of Commerce of China. Notes: East China includes Beijing, Tianjin, Hebei, Liaoning, Shanghai, Jiangsu, Zhejiang, Fujian, Shandong, Guangdong, Hainan. Central China includes Shanxi, Jilin, Heilongjiang, Anhui, Jiangxi, Henan, Hubei, Hunan.West China includes Inner Mongolia, Guangxi, Sichuan, Chongqing, Guizhou, Yunnan, Shaanxi, Gansu, Qinghai, Ningxia, Xinjiang, Tibet. Relevant authorities: Data about FDI absorbed by banking, securities and insurance industries.

enterprises, 16.95% of the total), and the leasing and business services industry (4,465 foreign-invested enterprises, 16.80% of the total). In 2015, the top four industries in terms of the amount of foreign investment actually used in China were the manufacturing industry (US$39.543 billion, 29.17% of the total), the real estate industry (US$28.995 billion, 21.39% of the total), the financial industry (US$24.279 billion, 17.91% of the total) and the wholesale and retail industry (US$12.023 billion, 8.87% of the total) (see Table 1.7). Table 1.7  FDI by industry in 2015 Industry

Total Agriculture, forestry, animal husbandry and fishery Mining Manufacturing Power, heat, gas and water production and supply Construction Transportation, warehousing and postal services Information transmission, software and information technology services

Number of enterprises

Share (%)

Amount of foreign investment actually used (US$)

Share (%)

26,584 609

100 2.29

1,355.77 15.34

100 1.13

34 4,507 264

0.13 16.95 0.99

2.43 395.43 22.50

0.18 29.17 1.66

176 449

0.66 1.69

15.59 41.86

1.15 3.09

1,311

4.93

38.36

2.83

China investment analysis report 2015  13 Industry

Wholesale and retail sales Accommodation and catering Finance Real estate Leasing and business services Scientific research and technical services Water, environment and public facilities management Life services, maintenance and other services Education Health, social security and social welfare Culture, sports and entertainment

Number of enterprises

Share (%)

Amount of foreign investment actually used (US$)

Share (%)

9,156 611

34.44 2.30

120.23 4.34

8.87 0.32

2,012 387 4,465

7.57 1.46 16.80

242.79 289.95 100.50

17.91 21.39 7.41

1,970

7.41

45.29

3.34

84

0.32

4.33

0.32

222

0.83

7.22

0.52

38 51

0.14 0.19

0.29 1.43

0.02 0.11

238

0.90

7.89

0.58

Source: Statistics of foreign investment of the Ministry of Commerce of China.

(1) Agriculture1 The absorption of foreign investment in China’s agriculture is of a small scale. In 2015, foreign investors invested in 609 agricultural enterprises in China, accounting for 2.29% of the total. The actual foreign investment in agriculture in the same year was US$1.534 billion, accounting for 1.13% of the total. Since 2002, foreign investment in agriculture had been declining, and reached the lowest point in 2006. After that, it increased year by year and hit the record high in 2012. The amount of foreign investment actually used in 2014 declined slightly from 2013, and increased in 2015 to 1.13% of the national total FDI (see Figure 1.2). (2)  Food processing In the food processing industry, in 2015, foreign investors invested in 154 enterprises, up 1.99% year-on-year, and the amount of foreign investment actually used amounted to US$1.105 billion, up 9.19% from 2014. From 2002 to 2015, foreign investment projects in the food processing industry totaled 8,993, and the accumulated amount of foreign investment actually used amounted to US$17.047. Starting from 2011, foreign investment in the food processing industry declined year by year. The amount of foreign investment actually used in the food processing industry picked up in 2014, but it was

14  Development overview

Figure 1.2  Amount and share of foreign investment actually used in agriculture. Source: Statistics of foreign investment of the Ministry of Commerce of China.

still about 40% lower than the peak level in 2004. In 2015, the amount of foreign investment actually used in the food processing industry continued to increase from 2014, accounting for 2.79% of the total investment in the manufacturing industry (see Figure 1.3). Note: In 2015, foreign investors invested in 4,507 enterprises in the manufacturing industry, down 21.18% from 2014. The amount of foreign investment actually used in the manufacturing industry in 2015 was US$39.543 billion, down 0.99% year-on-year. (3)  Chemical manufacturing In the chemical manufacturing industry,2 in 2015, foreign investors invested in 182 enterprises, down 22.22% from 2014, and the amount of foreign investment actually used was US$2.634 billion, down 17.14% year-on-year. From 2002 to 2015, foreign investment projects in the chemical manufacturing industry totaled 11,413, with an accumulated foreign investment actually used of US$44.973 billion. Since 2008, foreign investment in the chemical manufacturing industry has been stable. The amount of foreign investment actually used in the chemical manufacturing industry accounted for 6.66% of the total in the manufacturing industry in 2015 (see Figure 1.4).

China investment analysis report 2015  15

Figure 1.3 Amount and share of foreign investment actually used in the food processing industry. Source: Statistics of foreign investment of the Ministry of Commerce of China.

Figure 1.4 The amount and share of foreign investment actually used in the chemical manufacturing industry. Source: Statistics of foreign investment of the Ministry of Commerce of China.

16  Development overview (4)  General-purpose equipment manufacturing In the general-purpose equipment manufacturing industry,3 in 2015, the amount of foreign investment actually used was US$2.849 billion, down 2.50% year-onyear, and the number of foreign-invested enterprises fell by 19.01% year-onyear to 443 in 2015. From 2002 to 2015, in the general-purpose equipment manufacturing industry, foreign-invested enterprises totaled 16,433, and the amount of foreign investment actually used amounted to US$37.836 billion. From the dynamic point of view, in the past two years, the actual foreign investment amount in the general-purpose equipment manufacturing industry and its share in the total amount of foreign investment in the manufacturing industry were stable with a slight decrease. In 2015, the foreign investment used by the general-purpose equipment manufacturing industry accounted for 7.20% of the foreign investment used in the manufacturing industry (see Figure 1.5). (5)  Special-purpose equipment manufacturing In the special-purpose equipment manufacturing industry,4 in 2015, foreign investment dropped 6.01% year-on-year, and the foreign investment actually used amounted to US$2.502 billion, up 8.69% year-on-year. From 2002 to 2015, in the special-purpose equipment manufacturing industry, foreign-invested enterprises totaled 15,366, and the accumulated

Figure 1.5 Foreign investment actually used in general-equipment manufacturing industry and its share in the manufacturing industry. Source: Statistics of foreign investment of the Ministry of Commerce of China.

China investment analysis report 2015  17

Figure 1.6 The amount of foreign investment actually used in the special-purpose equipment manufacturing industry and its share in the manufacturing industry. Source: Statistics of foreign investment of the Ministry of Commerce of China.

amount of foreign investment actually used stood at US$34.373 billion. Since 2006, foreign-invested enterprises in the special-purpose equipment manufacturing i­ndustry has been decreasing year by year, but the amount of foreign investment actually used has increased continually, indicating that the investment in single projects in this industry is gradually expanding. Foreign investment in this industry in 2015 increased from a year earlier, accounting for 6.33% of the foreign investment used in the manufacturing industry (see Figure 1.6). (6)  Transportation equipment manufacturing In 2015, foreign investors invested in 322 enterprises in the transportation equipment manufacturing industry,5 down 10.80% year-on-year. The amount of foreign investment actually used in this industry amounted to US$3.708 billion in the same year, down 2.93% from 2014. From 2002 to 2015, in the transportation equipment manufacturing industry, foreign-invested enterprises totaled 10,816, and the accumulated amount of foreign investment actually used amounted to US$44.568. Since 2009, foreigninvested enterprises in the transportation equipment manufacturing industry has decreased, but the amount of foreign investment actually used has increased year by year, indicating that the investment scale in this industry has increased year by year in recent years. Foreign investment in this industry fell in 2015 from 2014, accounting for 9.38% of the foreign investment used in the manufacturing industry (see Figure 1.7).

18  Development overview

Figure 1.7 The amount of foreign capital actually used in the transportation equipment manufacturing industry and its share in the manufacturing industry. Source: Statistics of foreign investment of the Ministry of Commerce of China.

(7)  Manufacturing of communications equipment, computers and other electronic equipment In 2015, foreign investors invested in 507 enterprises in the communications equipment, computers and other electronic equipment manufacturing industry,6 declining by 13.92% from 2014 to the lowest level since 2002. The amount of foreign investment actually used in this industry in 2015 amounted to US$6.855 billion, an increase of 11.51% year-on-year. From 2002 to 2015, foreign-invested enterprises in this industry totaled 24,339, with a total amount of US$102.469 billion actually used. Since 2011, the number of foreign-invested enterprises and the amount of foreign investment actually used in the manufacturing of communication equipment, computers and other electronic equipment have declined, and the downward trend in the number of foreign-invested enterprises is even more significant. In 2015, however, the amount of foreign investment actually use increased from the previous year to US$6.855 billion, accounting for 17.34% of the foreign investment used in the manufacturing industry (see Figure 1.8). (8)  Leasing and business services The leasing and business services industry7 is a major industry for foreign investment. From 2002 to 2015, foreign-invested enterprises in leasing and business

China investment analysis report 2015  19

Figure 1.8 The amount of foreign investment actually used in the manufacturing of communications equipment, computers and other electronic equipment and its share in the manufacturing industry. Source: Statistics of foreign investment of the Ministry of Commerce of China.

s­ ervices totaled 36,896, and the accumulated amount of foreign investment actually used amounted to US$83.192 billion. The number of foreign-invested enterprises in this industry and its share in the total number of foreign-invested enterprises in the service sector increased significantly in 2002. From 2002 to 2014, the amount of foreign investment actually used in this industry also maintained steady growth, accounting for about 15% of the total amount of foreign investment actually used in the service sector on average. In 2015, in the leasing and business services industry, foreign investors invested in 4,465 enterprises, up by 12.67% year-on-year, and the actual use of foreign investment amounted to US$10.05 billion, down by 19.51% year-onyear, accounting for 8.81% of the foreign investment actually used in the service sector8 (see Figure 1.9). (9)  Wholesale and retail sales In recent years, the wholesale and retail industry9 has become an important destination for foreign investment in China’s service sector. In 2015, in the wholesale and retail industry, foreign-invested enterprises numbered 9,156,

20  Development overview

Figure 1.9  Amount of foreign investment actually used in the leasing and business ­services industries and its share in the service sector.

accounting for 47.30% of the foreign-invested enterprises in the service sector, and the actual use of foreign investment amounted to US$12.023 billion, accounting for 10.54% of the total in the service sector. From 2002 to 2015, foreign-invested enterprises in the wholesale and retail industry totaled 75,918, and the total amount of foreign investment actually used was US$75.597 billion. Since 2004, the shares of the wholesale and retail industry in terms of the number of foreign-invested enterprises and the amount of foreign investment actually used have increased steadily year by year, both reaching a record high in 2013. Both dropped in 2014 by 17.79% year-on-year and rose by 21.29% year-on-year in 2015 (see Figure 1.10). (10)  Transportation, warehousing and postal services From 2002 to 2015, foreign-invested enterprises in the transportation, warehousing and postal industry10 totaled 137,593, and the total amount of foreign investment actually used in this industry amounted to US$35.999 billion. The amount of foreign investment actually used in this industry increased year by year from 2002 to 2008, decreased slightly in 2009 and 2010, increased year by year from 2010 to the highest level of US$4.456 billion in 2014 and fell slightly to US$4.186 billion in 2015. In 2015, the number of foreign-invested enterprises in the transportation, warehousing and postal services industry rose by 16.26% year-on-year to 449, with actual use of foreign investment of US$4.186 billion, down by 6.06% from 2014 (see Figure 1.11), accounting for 3.67% of the total foreign investment used in the service sector.

China investment analysis report 2015  21

Figure 1.10 Amount of foreign investment actually used in the wholesale and retail industries and its share in the service sector. Source: Statistics of foreign investment of the Ministry of Commerce of China.

Figure 1.11 Amount of foreign investment actually used in the transportation, warehousing and postal services industries and its share in the service sector. Source: Statistics of foreign investment of the Ministry of Commerce of China.

22  Development overview (11)  Health, social security and social welfare There are few foreign investments in the health, social security and social welfare industry.11 From 2002 to 2015, foreign-invested enterprises in the health, social security and social welfare industry totaled 395, and the total foreign investment actually used in this industry stood at US$1.052 billion. In 2015, foreign investors invested in 51 enterprises in the health, social security and social welfare industry, up by 131.82% from 2014. The amount of foreign investment actually used in this industry in 2015 was US$143 million, up by 83.33% year-on-year. The foreign investment in this industry hit the record high of US$143 million since 2002 in 2015. It declined year by year from 2003 to 2007 and reached the lowest point of about US$100 million. The foreign investment in this industry increased continually from 2007 to 2010, decreased year by year from 2010 to 2012 and increased each year from 2013 to 2015. In 2015, the foreign investment used in this industry accounted for 0.12% of the total foreign investment used in the service sector of the year (see Figure 1.12). (12) Finance Finance12 is one of the important industries for foreign investment in China. In recent years, the financial sector has witnessed a significant increase in both the number of foreign-invested enterprises and the actual investment amount. From 2002 to 2015, foreign-invested enterprises in the financial sector totaled 4,379, using foreign investment of US$53.596 billion, with its share in the service sector showing a trend of long-term increase. From 2009 to 2011, the growth

Figure 1.12 Amount of foreign investment actually used in the health, social security and social welfare industries and its share in the service sector. Source: Statistics of foreign investment of the Ministry of Commerce of China.

China investment analysis report 2015  23

Figure 1.13 Amount of foreign investment actually used in the financial sector and its share in the service sector.

rate stayed above 50%. In 2012, the number of foreign-invested enterprises in the financial sector rose by 80.8% year-on-year to 282, and the amount of foreign investment actually used rose by 11% year-on-year to US$2.12 billion. From 2013 to 2015, the number of foreign-invested enterprises and the amount of foreign investment actually used in the financial sector rose significantly year by year, from 555 foreign-invested enterprises and US$8.655 billion in 2013 to 986 foreign-invested enterprises and US$13.122 billion in 2014. In 2015, both the number of foreign-invested enterprises and the amount of foreign investment actually used in the financial sector increased rapidly, with the number of foreigninvested enterprises reaching 2,012, up by 104.06% year-on-year, and the amount of foreign investment actually used reaching US$24.279 billion, up by 85.03% year-on-year. In 2015, the foreign investment used in the financial sector accounted for 21.29% of the total in the service sector (see Figure 1.13).

(II)  Outward investment of China The year 2015 saw a strong recovery in global FDI, with global FDI outflows totaling US$1.47 trillion, up by 11.8% year-on-year. In the face of the complex and changing international situation, the Chinese government actively promoted the Belt and Road Initiative and international capacity cooperation, and constantly sped up the facilitation of outward investment. Chinese enterprises were more and more motivated to go global. In 2015, China achieved a historic breakthrough in

24  Development overview OFDI and hit a record high of US$145.67 billion, ranking second in the world for the first time and exceeding the foreign investment attracted into China during the same period. China became a net capital exporter for the first time. 1 Overview In 2015, China’s net OFDI (hereinafter referred to as “flow”) stood at US$145.67 billion, up by 18.3% year-on-year, including US$96.71 billion of new equity investment, 66.4% of the total; US$37.91 billion of reinvested ­earnings, 26% of the total; and US$11.15 billion of investment with debt instruments, 7.6% of the total. As of the end of 2015, up to 20,200 Chinese investors13 set up 30,800 overseas enterprises through OFDI14 (hereinafter referred to as overseas Chinese enterprises) in 188 countries (regions).15 At the end of 2015, the total assets of overseas Chinese enterprises amounted to US$4.37 trillion, the accumulated net amount of OFDI (hereinafter referred to as “stock”) amounted to US$1,097.86 billion, including US$471.51 billion of equity investment, 43% of the total; US$442.78 billion of reinvested earnings, 40.3% of the total; and US$183.57 billion of investment with debt instruments, 16.7% of the total. The composition of China’s OFDI flow and stock in 2015 are shown in Table 1.8. The financial OFDI flow in 2015 totaled US$24.25 billion, up 52.3% yearon-year, including OFDI in monetary and financial services (previously known as the banking sector) up to US$16.4 billion, 67.6% of the total. By the end of 2015, the stock of financial OFDI stood at US$159.66 billion, including US$97.13 billion in monetary and financial services, 60.8% of the total, US$2.19 billion in the insurance industry, 1.4% of the total, US$6.8 billion in capital market services (previously known as the securities industry), 4.3% of the total, and US$53.44 billion in other financial services, 33.5% of the total. Table 1.8  Composition of flow and stock of China’s OFDI in 2015 Type

Financial Non-financial Total

Flow

Stock

Amount (US$100 million)

Year-on-year growth (%)

Share (%)

Amount (US$100 million)

Share (%)

242.5 1,214.2 1,456.7

52.3 13.3 65.6

16.6 83.4 100

1,596.6 9,382 10,978.6

14.5 85.5 100

Notes Financial investment refers to the investment directly made by Chinese investors into overseas financial enterprises. Non-financial investment refers to the investment directly made by Chinese investors into overseas non-financial enterprises. The difference between the data of non-financial flow in 2015 and the data in the Gazette of the Ministry of Commerce of China in 2015 (US$118.02 billion) is mainly caused by the difference in reinvested earnings.

China investment analysis report 2015  25 As of 2015, China’s state-owned commercial banks16 opened 79 branches and 57 affiliated bodies in 42 countries and regions such as the United States, Japan and the United Kingdom, with 47,000 employees, including 45,000 foreign employees, 95.7% of the total. By the end of 2015, China had set up seven insurance institutions overseas. In 2015, China’s non-financial OFDI stock totaled US$121.42 billion, up 13.3% year-on-year; the revenue from sales of overseas enterprises amounted to US$1,386.3 billion, down 11.7% from the previous year; the imports and exports of Chinese investors through overseas enterprises totaled US$313.2 billion, including imports totaling US$204.5 billion, a year-on-year decline of 39.5%, and exports totaling US$108.7 billion, down 1.4% from a year earlier. At the end of 2015, the non-financial OFDI stock stood at US$938.2 billion, and the total assets of overseas Chinese enterprises was US$2.44 trillion. In 2015, the total amount of various taxes paid by overseas Chinese enterprises to the recipient countries (regions) of the investment amounted to US$31.19 billion, an increase of 62.9% year-on-year. At the end of the year, the total number of employees in overseas Chinese enterprises was 2,837,000, of which 1,225,000 were foreign employees, accounting for 43.2% of the total, an increase of 392,000 from the end of 2014. 2  Investment flows and stocks (1)  Characteristics of China’s OFDI flows in 2015 1 )  R A P I D G R O W T H T O S E C O N D P L A C E I N T H E W O R L D

The year 2015 saw a slow economic recovery in developed economies, a slowdown in the growth of developing economies, and an overall weak recovery and slow growth of the world economy on the whole. China’s OFDI rose against the adverse trend to an all-time high of US$145.67 billion, up 18.3% year-on-year, higher than average global growth. With a flow of US$299.96 billion, China overtook Japan to take the second place after the United States. China’s OFDI, US$10.9 billion more than the foreign investment it received, exceeded the latter for the first time. Since the authoritative release of annual data by relevant departments in China in 2003, China’s OFDI had increased for 13 consecutive years. The flow in 2015 was 54 times the 2002 level. The annual growth rate from 2002 to 2015 was as high as 35.9% (see Figure 1.14). During the 12th Five-Year Plan period, China’s OFDI amounted to US$539.08 billion, 2.4 times as much as in the 11th Five-Year Plan period. 2 )  O F D I S U R P A S S E S F D I T O M A K E C H I N A A N E T C A P I T A L E X P O R T E R

In 2015, China actually used US$135.58 billion of foreign capital, up 6% yearon-year, ranking third in the world. China’s OFDI totaled US$145.67 billion, US$10.09 billion higher than the amount absorbed in the same year, and became a net capital exporter in direct investment for the first time. Measures

26  Development overview

Figure 1.14  China’s OFDI flow, 2002–2015. Note Data for the period 2002–2015 is from the statistics of the Ministry of Commerce of China.

such as continuous improvement of China’s comprehensive strength, accelerated implementation of the Belt and Road Initiative and international capacity cooperation, constant improvement of outward investment policies, and the deepening of multilateral and bilateral practical cooperation have helped Chinese enterprises go global. China’s OFDI has entered a fast track of ­development (see Figure 1.15).

Figure 1.15  China’s inward and outward investment, 2009–2015.

China investment analysis report 2015  27 3 )  A C T I V E M & A , F O C U S O N S P E C I F I C F I E L D S , AND RAPID EXPANSION

In 2015, Chinese enterprises carried out 579 M&A (mergers and acquisitions) projects with outward investment in 62 countries (regions), with a total actual transaction value of US$54.44 billion, including direct investment17 of US$37.28 billion, about 68.5% of the total M&A transaction value and 25.6% of China’s OFDI of the year. Overseas financing in 2015 amounted to US$17.16 billion, accounting for 31.5% of the M&A value. China’s outward investment and M&A in 2015 involved 18 industries, including manufacturing, information transmission, software and information technology services, mining, culture, sports and entertainment, leasing and business services, etc. The acquisition of a nearly 60% stake in Pirelli of Italy by China National Tire & Rubber Corporation with US$5.29 billion of outward investment is the largest overseas acquisition by a Chinese company in 2015. Compared with 2014, M&A projects were also carried out in the industries of water, environment and public facilities management. In terms of the transaction volume of M&A, the manufacturing industry ranked first with US$13.72 billion, up 13.4% year-on-year, involving 137 projects. The information transmission, software and information technology services industry ranked second with US$8.41 billion, a year-on-year increase of 135.6%. The M&A transaction value in the financial sector, which had grown significantly in the past two years, rose by 217.8% year-on-year to US$6.61 billion. Due to the continued downward trend in global bulk commodity markets and other factors, the M&A transaction value in the mining industry fell by 70.3% from 2014 (US$17.91 billion) to US$5.32 billion. In 2015, Chinese companies carried out 101 M&A projects in BRI countries, the transaction volumes amounted to US$9.23 billion, accounting for 17% of the total. Among these countries, Israel, Kazakhstan, Singapore, Russia, Laos, etc., attracted more than US$1 billion of investment through M&A from Chinese companies (see Tables 1.9 and 1.10). 4 )  N E W E Q U I T Y I N V E S T M E N T E X C E E D E D 60% F O R T H E F I R S T T I M E , SHARE OF DEBT INSTRUMENTS REACHED RECORD LOW

In 2015, new equity investment amounted to US$96.71 billion, accounting for 66.4% of the total flow of the year, up 21.1 percentage points from 2014. The reinvestment of earnings in 2015 was US$37.91 billion, accounting for 26.0% of the total, down by 10.1 percentage points from 2014. The reinvestment of equity and earnings in 2015 totaled US$134.62 billion, accounting for 92.4% of the total flow. Since the cost of overseas financing is lower than that in the Chinese Mainland, Chinese enterprises were increasingly involved in overseas financing in the Hong Kong SAR, and other places before making overseas investment, resulting in the reduction of loans provided directly by Chinese investors to overseas Chinese enterprises. The investment in debt instruments in 2015 stood at US$11.15 billion, down 51.9% from the US$22.99 billion of 2014, hitting a record low (see Table 1.11 and Figure 1.16).

28  Development overview Table 1.9  Industries concerned in China’s outward investment via M&A in 2015 Industry

Number (minimum)

Manufacturing 131 Information transmission, software and 58 information technology services Finance 18 Mining 24 Culture, sports and entertainment 21 Leasing and business services 77 Accommodation and catering 11 Wholesale and retail sales 81 Real estate 21 Scientific research and technical services 43 Transportation, warehousing and postal 11 services Construction 9 Water, environment and public 4 facilities management Health, social work and social welfare 10 Power, heat, gas and water production 5 and supply Agriculture, forestry, animal husbandry 37 and fishery Life services, maintenance and other 12 services Education 6 Total 579

Actual transaction volume (US$100 million)

Financial ratio x%

137.2 84.1

25.2 15.5

66.1 53.2 32.3 31.3 27.1 26.6 20.7 17.6 16.1

12.1 9.8 5.9 5.7 5.0 4.9 3.8 3.2 3.0

11.2 8.8

2.1 1.6

4.3 3.8

0.8 0.7

2.6

0.5

1.2

0.2

0.2 544.4

– 100

Table 1.10  M&A in China’s OFDI, 2004–2015 Year

Transaction value (US$100 million)

Year-on-year growth (%)

Share (%)

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

30.0 65.0 82.5 63.0 302.0 192.0 297.0 272.0 434.0 529.0 569.0 544.4

– 116.7 26.9 –23.6 379.4 –36.4 54.7 –8.4 – 21.9 7.6 –4.3

54.5 53.0 39.0 23.8 54.0 34.0 43.2 36.4 31.4 31.3 26.4 25.6

Note The transaction value of M&A from 2012 to 2015 includes overseas financing, and the share is the proportion of direct investment in the flow of the year concerned.

China investment analysis report 2015  29 Table 1.11  Composition of China’s OFDI flow, 2006–2015 Year

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Flow

211.6 265.1 559.1 565.3 688.1 746.5 878.0 1078.4 1231.2 1456.7

New equity investment

Reinvestment of earnings

Investment in debt instrument

Amount (US$100 million)

Share (%)

Amount (US$100 million)

Share (%)

Amount (US$100 million)

Share (%)

51.7 86.9 283.6 172.5 206.4 313.8 311.4 307.3 557.3 967.1

24.4 32.8 50.7 30.5 30.0 42.0 35.5 28.5 45.3 66.4

66.5 97.9 98.9 161.3 240.1 244.6 224.7 383.2 444.0 379.1

31.4 36.9 17.7 28.5 34.9 32.8 25.6 35.5 36.1 26.0

93.4 80.3 176.6 231.5 241.6 188.1 341.9 387.9 229.9 110.5

44.2 30.3 31.6 41.0 35.1 25.2 38.9 36.0 18.6 7.6

Note The OFDI data for the period 2006–2015 include OFDI of all industries.

Figure 1.16  Composition of China’s OFDI, 2006–2015. 5 )  C O V E R A G E O F A W I D E R A N G E O F I N D U S T R I E S A N D R A P I D GROWTH IN THREE INDUSTRIES

China’s OFDI in 2015 involved 18 sectors of the national economy. Among them, its outward investment in the industries of manufacturing, finance, information transmission, software and information service, etc., grew faster.

30  Development overview China’s OFDI in the manufacturing industry in 2015 totaled US$19.99 billion, up 108.5% year-on-year, accounting for 13.7% of the total flow of the year. The investment mainly went to the manufacturing and production of automobiles, computers, communications equipment and other electronic equipment, raw chemicals and chemical products, special-purpose equipment, the rubber and plastic industry, pharmaceutical manufacturing, the textile industry, the manufacturing of railway, ship, aerospace and other transportation equipment, the non-metallic mineral product industry, etc. OFDI in equipment manufacturing amounted to US$10.05 billion in 2015, up 158.4% year-on-year, accounting for 50.3% of the total outward investment of the manufacturing industry. China’s OFDI in the financial sector in 2015 stood at US$24.25 billion, up 52.3% from a year earlier, accounting for 16.6% of the total. Chinese financial institutions were active in OFDI in 2015, investing a total of US$24.43 billion abroad, including US$23.7 billion of direct investment in overseas financial enterprises and US$730 million in overseas non-financial enterprises. Chinese non-financial institutions invested US$550 million in overseas financial enterprises in 2015. China’s OFDI amounted to US$6.82 billion in the information transmission, software and information technology services industry, up 115.2% year-on-year, accounting for 4.7% of the total. In the scientific research and technical services industry, China’s OFDI was US$3.35 billion, up 100.5% year-on-year, accounting for 2.3% of the total. Its OFDI in the culture, sports and entertainment industry amounted to US$1.75 billion, a year-on-year increase of 236.6%, accounting for 1.2% of the total. Its OFDI in the water, environment and public facilities management industry totaled US$1.37 billion, up 148.1% year-on-year, accounting for 1.1% of the total. Its OFDI in the accommodation and catering industry totaled US$720 million, a year-on-year increase of 195.5%, accounting for 0.5% of the total. In 2015, among the major industries with OFDI from China, the transportation, warehousing and postal services industry contributed US$2.73 billion, down 34.7% year-on-year. China’s OFDI in the mining industry stood at US$11.25 billion in 2015, down 32% from a year earlier, and that in the leasing and business services industry amounted to US$36.26 billion (mainly in the form of shareholding), down 1.6% year-on-year (see Table 1.12 and Figure 1.17). 6 )  R A P I D I N C R E A S E I N I N V E S T M E N T I N A S I A A N D T H E AMERICAS AND REDUCTION IN INVESTMENT IN OTHER REGIONS

In 2015, China’s OFDI flows to Asia totaled US$108.37 billion, a year-on-year increase of 27.5%, accounting for 74.4% of the total OFDI flows of the year. The investment in the Hong Kong SAR for the year was US$89.79 billion, up 26.7% year-on-year, accounting for 82.9% of the total OFDI in Asia. Its outward investment in the 10 ASEAN countries was US$14.6 billion, up 87% from a year earlier, accounting for 13.5% of its outward investment in Asia. In 2015, Chinese companies invested US$12.61 billion in Latin America, a year-on-year increase of 19.6%, accounting for 8.6% of the total flow of the year. This included US$10.21 billion into the Cayman Islands, US$1.85 billion

China investment analysis report 2015  31 Table 1.12  Distribution of China’s OFDI flow in 2015, by industry Industry

Flow ($100 million)

Leasing and business services 362.6 Finance 242.5 Manufacturing 199.9 Wholesale and retail sales 192.2 Mining 112.5 Real estate 77.9 Information transmission, software and 68.2 information technology services Construction 37.4 Scientific research and technical 33.5 services Transportation, warehousing 27.3 and postal services Agriculture, forestry, animal 25.7 husbandry and fishery Power, heat, gas and water 21.3 production and supply Culture, sports and entertainment 17.5 Life services, maintenance and 16.0 other services Water, environment and public 13.7 facilities management Accommodation and catering 7.2 Other 1.3 Total 1,456.7

Year-on-year growth (%)

Share (%)

–1.6 52.3 108.5 5.1 –32.0 17.9 115.2

24.9 16.6 13.7 13.2 7.7 5.3 4.7

10.0 100.5

2.6 2.3

–34.7

1.9

26.4

1.8

21.0

1.5

236.6 –3.2

1.2 0.9

148.1

1.1

195.5 – 18.3

0.5 0.1 100

Figure 1.17  China’s OFDI flow in 2015, by industry (unit: US$100 million).

32  Development overview Table 1.13  China’s OFDI flow in 2015, by destination Economies Asia Latin America North America Europe Oceania Africa Total

Amount (US$100 million) 1,083.7 126.1 107.2 71.2 38.7 29.8 1,456.7

Year-onyear (%) 27.5 19.6 16.4 –34.3 –10.7 –7.0 11.5

Share (%) 74.4 8.6 7.4 4.9 2.7 2.0 100

Source: World Investment Report 2016 of the United Nations Conference on Trade and Development (UNCTAD).

into the British Virgin Islands, US$290 million into Venezuela and US$120 million into Ecuador. In 2015, Chinese companies invested US$10.72 billion in North America, up 16.4% year-on-year, accounting for 7.4% of the OFDI flow in that year. This included US$1.13 billion in Bermuda, up 59.2% year-on-year, US$156,000 in Canada, up 72.9% year-on-year and US$8.03 billion in the U.S., up 5.7% year-on-year. In 2015, Chinese companies invested US$7.22 billion in Europe, down 34.3% year-on-year, accounting for 4.9% of the OFDI flow in that year. The investment mainly went to the Netherlands, Russia, the UK, Germany, France, etc. China’s investment in the European Union amounted to US$5.48 billion in 2015, down 44% from 2014. China’s investment in Oceania stood at US$3.87 billion in 2015, down 10.7% year-on-year, accounting for 2.7% of the OFDI flow in that year, which mainly went to Australia, New Zealand, Samoa, etc. China’s investment in Africa amounted to US$2.98 billion in 2015, down 7% year-on-year, accounting for 2% of the OFDI flow in that year. Its investment in Africa mainly went to Ghana, Kenya, South Africa, Tanzania, Congo (Kinshasa), Algeria, Uganda, etc. (see Table 1.13). 7 )  H I G H C O N C E N T R A T I O N A N D R A P I D I N V E S T M E N T GROWTH IN BRI COUNTRIES

In 2015, nearly 80% of China’s OFDI went to the Hong Kong SAR, the Netherlands, the Cayman Islands, the British Virgin Islands and Bermuda. They together absorbed US$116.44 billion of investment from China, accounting for 79.9% of the total. The overseas enterprises established by Chinese enterprises in these countries (regions) mainly engaged in business services. Up to 60% of China’s outward investment through M&A projects in that year were completed through reinvestment by these overseas enterprises. China’s investment in the Hong Kong SAR in 2015 amounted to US$89.79 billion, accounting for 61.6% of the total flow of the year. The investment mainly went to leasing and business services, wholesale and retail sales, finance, mining, manufacturing, real estate, information transmission, software and information technology services.

China investment analysis report 2015  33 China’s investment in the Netherlands in 2015 totaled US$13.46 billion, 9.2% of the total, which mainly went to mining, wholesale and retail sales, business services, and manufacturing. China’s investment in the Cayman Islands in 2015 amounted to US$10.21 billion, 7% of the total, which mainly went to business services. China’s investment in the British Virgin Islands in 2015 amounted to US$1.85 billion, 1.3% of the total, which mainly went to business services. China’s investment in Bermuda in 2015 amounted to US$1.13 billion, 0.8% of the total, which mainly went to business services. In 2015, China’s investment flow to BRI countries totaled US$18.93 billion, a year-on-year increase of 38.6%, doubling the increase in global investment and accounting for 13% of the total flow of that year. The top 10 recipient countries were Singapore, Russia, Indonesia, the United Arab Emirates, India, Turkey, Vietnam, Laos, Malaysia, and Cambodia. 8 )  S U B - N A T I O N A L I N V E S T M E N T G R E W S T E A D I L Y T O N E A R L Y 80% O F T H E T O T A L A N D S H A N G H A I, B E I J I N G A N D G U A N G D O N G ARE THE TOP THREE

In 2015, the sub-national non-financial OFDI flow of China reached US$9.36 billion, up 71.0% year-on-year, accounting for 77% of its flow of non-financial OFDI, constituting the main force of China’s OFDI in 2015. This included US$79.82 billion from East China, accounting for 85.2% of the sub-national investment flow, up 78.2% from 2014, US$7.45 billion from West China, accounting for 8.0% of the sub-national investment flow, up 14.2% from 2014, and US$6.33 billion from Central China, accounting for 6.8% of the subnational investment flow, up 84.7% from 2014. The top 10 Chinese regions in OFDI flow in 2015 were Shanghai, Beijing, Guangdong, Jiangsu, Shandong, Zhejiang, Fujian, Tianjin, Liaoning and Anhui. The outward investment of them totaled US$78.67 billion, accounting for 84% of the sub-national outward investment flow. Shanghai, Beijing and Guangdong were the top three, each contributing more than US$10 billion of outward investment in 2015 (see Tables 1.14 and 1.15). Table 1.14  Sub-national OFDI flow in 2015, by region Region

Flow (US$100 million)

Share (%)

Year-on-year growth (%)

East China Central China West China Total

798.2 63.3 74.5 936

85.2 6.8 8.0 100

78.2 84.7 14.2 71.0

Notes Central China includes six provinces, namely Shanxi, Anhui, Jiangxi, Henan, Hubei and Hunan. West China includes 12 provinces and municipalities, namely Inner Mongolia, Guangxi, Sichuan, Chongqing, Guizhou, Yunnan, Shaanxi, Gansu, Qinghai, Ningxia, Xinjiang and Tibet.

34  Development overview Table 1.15  Top 10 regions of sub-national OFDI flow in 2015 No.

Region

Flow (US$100 million)

Year-on-year growth (%)

 1  2  3  4  5  6  7  8  9 10

Shanghai Beijing Guangdong Jiangsu Shandong Zhejiang Fujian Tianjin Liaoning Anhui Total

231.8 122.8 122.6 72.5 71.1 71.1 27.6 25.3 21.2 20.7 786.7

364.4 68.8 12.5 78.1 81.7 84.0 162.3 –39.0 43.5 443.9 –

(2)  Characteristics of China’s OFDI stock by the end of 2015 1 )  C H I N A R A N K E D H I G H E R W I T H A L A R G E R S H A R E O F O F D I IN THE WORLD

At the end of 2015, China’s OFDI stock totaled US$1,097.86 billion, an increase of US$215.2 billion from the end of 2014 and 36.7 times the stock at the end of 2002. The share in the global OFDI stock rose from 0.4% in 2002 to 4.4%, and the ranking in the world rose from 25th to 8th. China’s OFDI started late and entered a period of rapid growth after 2010. The stock is still far smaller than that of developed countries. China’s OFDI stock at the end of 2015 was only 18.3% of that of the United States, 60.6% of that of Germany and 71.4% of that of the UK (see Figure 1.18 and Table 1.16).

Figure 1.18  China’s OFDI stock, 2002–2015 (unit: US$100 million).

China investment analysis report 2015  35 Table 1.16  Top 10 countries (regions) in OFDI stock at the end of 2015 Ranking

Countries (regions)

 1  2  3  4  5  6  7  8  9 10

U.S.A. Germany United Kingdom Hong Kong SAR France Japan Switzerland China Canada Netherlands Total

OFDI stock at the end of 2015 (US$100 million) 59,827.9 18,124.7 15,381.3 14,856.6 13,141.6 12,265.5 11,381.8 10,978.6 10,783.3 10,742.9 177,484.2

Ratio of China’s OFDI stock to it (%) 23.9 7.2 6.2 5.9 5.3 4.9 4.5 4.4 4.3 4.3 70.9

Source: The data of China’s OFDI stock by 2015 is from the statistics of China’s Ministry of Commerce, and the data of other countries (regions) is from World Investment Report 2016 of UNCTAD. 2 )  A S I A R E C E I V E D 70% O F C H I N A ’ S O F D I A N D D E V E L O P I N G E C O N O M I E S G O T 80%

At the end of 2015, China’s OFDI stock was distributed in 188 countries (regions) on six continents, accounting for 80.7% of the total number of countries (regions) in the world. Compared with 2014, Iceland, Saint Lucia and British Anguilla were new recipients of China’s outward investment, while investment in Burkina Faso discontinued. At the end of 2015, China’s investment stock in Asia stood at US$768.9 billion, accounting for 70% of the total, mainly distributed in the Hong Kong SAR, ­Singapore, Indonesia, the Macao SAR, Kazakhstan, Laos, the United Arab Emirates, Myanmar and Pakistan, India, Mongolia, the Republic of Korea, ­Cambodia, Thailand, Japan, Iran, etc. The Hong Kong SAR took 85.4% of the stock in Asia. China’s investment stock in Latin America at the end of 2015 was US$126.32 billion, or 11.5% of the total, mainly in the Cayman Islands, the British Virgin Islands, Venezuela, Brazil, Argentina, Ecuador, Peru, Trinidad and Tobago, Colombia, and Mexico. Specifically, the stock in the Cayman Islands and the British Virgin Islands combined amounted to US$114.07 billion, accounting for 90.3% of China’s investment stock in Latin America. China’s investment stock in Europe at the end of 2015 stood at US$83.68 billion, 7.6% of the total, mainly distributed in the Netherlands, the UK, Russia, Luxembourg, Germany, France, Norway, Sweden and Italy. China’s investment stock in North America at the end of 2015 amounted to US$52.18 billion, accounting for 4.8% of the total, mainly in the United States and Canada. China’s investment stock in Africa at the end of 2015 was US$34.69 billion, or 3.2% of the total, mainly distributed in South Africa, the Democratic

36  Development overview

Figure 1.19  China’s OFDI stock as of 2015, by region.

Republic of the Congo, Algeria, Nigeria, Zambia, Sudan, Zimbabwe, Ghana, Angola, Tanzania, Ethiopia, Kenya, the Republic of the Congo, and Mauritius. China’s investment stock in Oceania at the end of 2015 was US$32.09 billion, accounting for 2.9% of the total, mainly distributed in Australia, Papua New Guinea, New Zealand, Samoa, and Fiji (see Figure 1.19). Up to 80% of China’s outward investment stock is in developing ­economies. At the end of 2015, China’s investment stock in developing economies was US$920.887 billion, 83.9% of the total. This included US$656.855 billion in the Hong Kong SAR, accounting for 71.3% of the investment stock in developing economies, and US$62.716 billion in the ASEAN, accounting for 6.8% of the investment stock in developing economies. China’s investment stock in developed economies at the end of 2015 amounted to US$153.652 billion, accounting for 14% of the total, including US$64.46 billion in the EU, accounting for 41.9% of the investment stock in developed economies, US$40.802 billion in the United States, accounting for 26.6% of the investment stock in developed economies, US$28.374 billion in Australia, accounting for 18.4% of the investment stock in developed economies, US$8.516 billion in Canada, accounting for 5.5% of the investment stock in developed economies, US$3.471 billion in Norway, accounting for 2.3% of the investment stock in developed economies, and US$3.038 billion in Japan, accounting for 2% of the investment stock in developed economies (see Table 1.17 and Figure 1.20). At the end of 2015, China’s OFDI stock in economies in transition18 amounted to US$23.321 billion, or 2.1% of its total stock. Up to 60.1% of China’s investment stock in economies in transition, or US$14.02 billion, was in Russia, 21.8% of such stock, or US$5.095 billion was in Kazakhstan, 4.6% of

China investment analysis report 2015  37 Table 1.17  China’s OFDI stock in developed countries (regions) at the end of 2015 Country/economy

Stock (US$100 million)

Share (%)

European Union U.S.A. Australia Canada Norway Japan Bermuda Islands New Zealand Switzerland Israel Total

644.60 408.02 283.74 85.16 34.71 30.38 28.61 12.09 6.04 3.17 1,536.52

41.9 26.6 18.4 5.5 2.3 2.0 1.9 0.8 0.4 0.2 100.0

Figure 1.20  Composition of China’s OFDI stock as of 2015.

such stock, or US$1.071 billion was in Kyrgyzstan, 3.9% of such stock, or US$909 million, was in Tajikistan, and 0.6% of such stock, or US$133 million, was in Turkmenistan. At the end of 2015, China’s OFDI stock in the top 20 countries (regions) in terms of China’s OFDI stock totaled US$988.059 billion, accounting for 89.8% of China’s OFDI stock. The top 20 countries (regions) were Hong Kong SAR,

38  Development overview Table 1.18  Top 20 countries (regions) in China’s OFDI stock at the end of 2015 No.

Country (region)

Stock (US$100 million)

Share (%)

 1  2  3  4  5  6  7  8  9 10 11 12 13 14 15 16 17 18 19 20

Hong Kong SAR, China Cayman Islands British Virgin Islands U.S.A. Singapore Australia Netherlands UK Russian Federation Canada Indonesia Luxembourg Germany Macao SAR France Kazakhstan Laos South Africa United Arab Emirates Myanmar Total

6,568.55 624.04 516.72 408.02 319.85 283.74 200.67 166.32 140.20 85.16 81.25 77.40 58.82 57.39 57.24 50.95 48.42 47.23 46.03 42.59 9,880.59

59.8 5.7 4.7 3.7 2.9 2.6 1.8 1.5 1.3 0.8 0.7 0.7 0.5 0.5 0.5 0.5 0.4 0.4 0.4 0.4 89.8

China, the Cayman Islands, the British Virgin Islands, the United States, Singapore, Australia, the Netherlands, the United Kingdom, Russia, Canada, Indonesia, Luxembourg, Germany, Macao SAR, China, France, Kazakhstan, Laos, South Africa, the United Arab Emirates, and Myanmar (see Table 1.18). At the end of 2015, China’s direct investment stock in BRI countries amounted to US$115.68 billion, accounting for 10.5% of China’s OFDI stock. The top 10 BRI countries that received China’s OFDI were Singapore, Russia, Indonesia, Kazakhstan, Laos, the United Arab Emirates, Myanmar, Pakistan, India and Cambodia. 3 )  W I D E D I S T R I B U T I O N A C R O S S I N D U S T R I E S W I T H O V E R 80 % C O N C E N T R A T E D I N F I V E I N D U S T R I E S

At the end of 2015, China’s OFDI covered all industries of the national economy. The stocks in four industries exceeded US$100 billion. The leasing and business services industry topped the list with a stock of US$409.57 billion, accounting for 37.3% of China’s OFDI stock, followed by finance with a stock of US$159.66 billion, 14.5% of the total, mining with a stock of US$142.38 billion, 13% of the total, and wholesale and retail sales with a stock of US$121.94 billion, 11.1% of the total. The OFDI stock of these four industries combined amounted to US$833.55 billion, accounting for 75.9% of China’s

China investment analysis report 2015  39 OFDI stock. The distribution of China’s OFDI stock in other major industries at the end of 2015 was as follows: The manufacturing industry ranked fifth with a stock of US$78.53 billion, accounting for 7.2% of the total. The investment stock in the manufacturing industry was mainly distributed in the manufacturing of automobiles, computers, communications equipment and other electronic equipment, specialpurpose equipment, raw chemicals and chemical products and medicine, the rubber and plastic products industry, the manufacturing of textile, electrical machinery and equipment, ferrous metal smelting and rolling processing, nonferrous metal smelting and rolling processing, food production, textile and clothing, manufacturing of general-purpose equipment, metalworking, etc. Among them, China’s OFDI stock in equipment manufacturing amounted to US$31.38 billion, accounting for 40% of the investment stock in the manufacturing industry. China’s OFDI stock in transportation, warehousing and postal services stood at US$3.91 billion, accounting for 3.6% of the total, mainly distributed in water transportation, cargo handling and other transportation agency services, air transportation, and pipeline transportation. China’s OFDI stock in the real estate sector totaled US$33.49 billion, or 3.1% of the total. China’s OFDI stock in the construction industry totaled US$27.12 billion and accounted for 2.5% of the total. The investment was mainly in-house construction, building decoration and other construction and installation services. China’s OFDI stock in information transmission, software and information technology services accounted for 1.9% of the total at US$20.93 billion, mainly for software and information technology services, etc. China’s OFDI stock in the production and supply of electricity, heat, gas and water amounted to US$15.66 billion, or 1.4% of the total. The investment was mainly in production and supply of electricity/heat. China’s OFDI stock in scientific research and technical services accounted for 1.3% of the total at US$14.43 billion, mainly for special-purpose technical services, research, experiment and development. China’s OFDI stock in life services, maintenance and other services accounted for 1.3% of the total at US$14.28 billion, mainly for other services and life services. China’s OFDI stock in agriculture, forestry, animal husbandry and fishery amounted to US$11.48 billion, accounting for 1.0% of the total. Specifically, OFDI in agriculture accounted for 27%, that in forestry accounted for 21.9%, and that in fishery accounted for 9.9%. China’s OFDI stock in the culture, sports and entertainment industries, US$3.25 billion, accounted for 0.3% of the total. China’s OFDI stock in water, environment and public facilities management amounted to US$2.54 billion, accounting for 0.2% of the total. China’s OFDI stock in the accommodation and catering industry amounted to US$2.23 billion, accounting for 0.2% of the total.

40  Development overview China’s OFDI stock in other industries amounted to US$460 million, accounting for 0.1% of the total (see Figures 1.21 and 1.22). According to the regional distribution of stock in industries, China’s OFDI in industries in various regions is highly concentrated (see Table 1.19). At the end of 2015, 75.2% of China’s OFDI stock was distributed in the tertiary industry (i.e., the services sector) with an amount of US$826.19 billion, mainly in business services, finance, wholesale and retail sales, transportation and warehousing, real estate, etc. Its OFDI stock in the secondary sector amounted to US$263.05 billion, or 24% of the total, including US$141.84 billion in mining (excluding ancillary mining activities), accounting for 53.9% of the OFDI stock in the secondary sector, US$78.43 billion in manufacturing (excluding metal products, machinery and equipment maintenance), accounting for 29.8%, US$27.12 billion in construction, accounting for 10.3%, and

Figure 1.21  China’s OFDI stock at the end of 2015, by industry (unit: US$100 million).

Figure 1.22  Shares of China’s OFDI stock at the end of 2015, by industry.

China investment analysis report 2015  41 Table 1.19 Top five industries receiving China’s OFDI on each continent at the end of 2015 Continent

Industry

Stock (US$100 million)

Share (%)

Asia

Leasing and business services Finance Wholesale and retail sales Mining Manufacturing Subtotal Mining Construction Manufacturing Finance Scientific research and technical services Subtotal Mining Manufacturing Finance Leasing and business services Wholesale and retail sales Subtotal Leasing and business services Finance Mining Wholesale and retail sales Transportation, warehousing and postal services Subtotal Manufacturing Finance Leasing and business services Mining Real estate Subtotal Mining Real estate Finance Leasing and business services Manufacturing Subtotal

3,313.1 1,030.9 1,004.3 714.6 407.1 6,470.0 95.4 95.1 46.3 34.2 14.6

43.1 13.4 13.1 9.3 5.3 84.2 27.5 27.4 13.3 9.9 4.2

285.6 241.8 160.8 153.4 80.0

82.3 28.9 19.2 18.3 9.6

58.6 694.6 602.5 230.7 121.5 96.2 45.5

7.0 83.0 47.7 18.3 9.6 7.6 3.6

1,096.4 121.9 121.7 65.7

86.8 23.4 23.3 12.6

64.8 37.6 411.7 185.7 29.9 25.6 23.4

12.4 7.2 78.9 57.9 9.3 8.0 7.3

13.3 277.9

4.1 86.6

Africa

Europe

Latin America

North America

Oceania

US$15.66 billion in power, heat, gas and water production and supply, 6%. China’s OFDI stock in the primary sector (agriculture, forestry, animal husbandry and fishery, excluding related services) was US$8.62 billion, accounting for 0.8% of China’s OFDI stock.

42  Development overview 4 )  S T A T E - O W N E D A N D N O N - S T A T E - O W N E D E N T E R P R I S E S HAD EQUAL SHARES

At the end of 2015, in terms of the nature of investing entities, in the US$938.2 billion of the OFDI in non-financial sectors, state-owned enterprises (SOEs) contributed 50.4% while non-state-owned enterprises contributed 49.6%, an increase of 3.2 percentage points over the previous year. A total of 32.2% were contributed by limited liability companies, 8.7% by companies limited by shares, 2.1% by private enterprises, 1.7% by joint-stock companies, 1.5% by foreign-invested enterprises, 0.4% by enterprises with investment from the Hong Kong SAR, the Macao SAR or Taiwan of China, 0.3% by collective enterprises, and 2.7% by other types of enterprises (see Figures 1.23 and 1.24). 5 )  S U B N A T I O N A L I N V E S T M E N T G R E W I N S H A R E W I T H N E A R L Y 80% F R O M E A S T C H I N A

The proportion of subnational investment increased year by year. At the end of 2015, the stock of non-financial foreign direct investment at subnational levels reached US$344.48 billion, accounting for 36.7% of the national non-financial outward investment stock, 5.1 percentage points higher from 2014. Specifically, East China contributed US$286.54 billion, accounting for 83.2%, West China contributed US$32.01 billion, accounting for 9.3%, and Central China contributed US$25.93 billion, accounting for 7.5%. Guangdong contributed the largest OFDI stock, and the second was Shanghai, followed in order by Beijing, Shandong, Jiangsu, Zhejiang, Liaoning, Tianjin, Fujian and Hunan (see Figure 1.25 and Table 1.20).

Figure 1.23  China’s non-financial OFDI stock at the end of 2015.

China investment analysis report 2015  43

Figure 1.24  Share of state-owned and non-state-owned enterprises in China’s OFDI stock, 2006–2015.

Figure 1.25 Contribution of regions to China’s subnational OFDI stock at the end of 2015.

3  China’s investment in major economies (1) Overview In 2015, China’s investment flows to major economies19 totaled US$124.265 billion, a year-on-year increase of 23.3%, accounting for 85.3% of its total flow. China’s total investment stock in major economies amounted to US$867.227 billion, or 79.0% of its total stock (see Table 1.21).

44  Development overview Table 1.20  Top 10 regions of OFDI stock at the end of 2015 No.

Region

Stock (US$100 million)

 1  2  3  4  5  6  7  8  9 10

Guangdong Shanghai Beijing Shandong Jiangsu Zhejiang Liaoning Tianjin Fujian Hunan Total (80.3% of subnational OFDI stock)

686.5 583.6 388.0 273.1 266.1 223.6 113.2 109.4 82.0 81.0 2,766.5

Table 1.21  China’s investment in major economies in 2015 Economy

Hong Kong SAR European Union ASEAN U.S.A. Australia Russian Federation Total

Flow

Stock

Amount (US$100 million)

Year-on-year growth (%)

Share (%)

897.90 54.80 146.04 80.29 34.01 29.61 1,242.65

26.7 –44.0 87.0 5.7 –16.0 367.3 23.3

61.7 3.8 10.0 5.5 2.3 2.0 85.3

Amount (US$100 million) 6,568.55 644.60 627.16 408.02 283.74 140.20 8,672.27

Share (%) 59.8 5.9 5.7 3.7 2.6 1.3 79.0

(2)  Investment in the Hong Kong SAR In 2015, the investment flow from the Chinese Mainland to the Hong Kong SAR amounted to US$89,789,780,000, accounting for 61.6% of the total, a year-on-year increase of 26.7%. The Hong Kong SAR received the largest OFDI flow from the Chinese Mainland. There were 126 cases of M&A by Chinese enterprises in the Hong Kong SAR, involving a total value of US$4.48 billion. Meanwhile, most of the major M&A projects for China’s OFDI were completed through reinvestment via the Hong Kong SAR. For example, China National Tire & Rubber Co., Ltd. acquired a nearly 60% stake of Pirelli, Italy, for US$5.29 billion, Fosun International Ltd., a Shanghai-based company, purchased a 100% stake in Ironshore of the United States for US$2.52 billion, Sinopec purchased a 20% stake in Russia’s Sibur Holding PJSC for US$1.34 billion, China Communications Construction Co., Ltd. acquired John Holland Group Pty Ltd. of Australia for US$1 billion. All these projects were completed through reinvestment. Concerning the recipient industries, leasing and

China investment analysis report 2015  45 business services (mainly to hold controlling share) received US$35,704.24 million, a year-on-year increase of 49.1%, accounting for 39.8% of the total; finance received US$16,447.92 million, up 69.5%, accounting for 18.3% of the total; wholesale and retail sales received US$14,317.95 million, up 4.7% yearon-year, accounting for 15.9% of the total; the manufacturing industry received US$5,782.25 million, up 84.3% year-on-year, accounting for 6.4% of the total; the real estate industry received US$5,491.08 million, up 86%, accounting for 6.1% of the total; the information transmission, software and information technology services industry received US$2,750.49 million, down 0.5% from a year earlier, accounting for 3.1% of the total; the mining industry received US$2,057 million, down 75.3% from a year earlier, accounting for 2.3% of the total. As of the end of 2015, investors from the Chinese Mainland set up more than 9,300 enterprises through direct investment in the Hong Kong SAR. The investment stock amounted to US$656.855 billion at the end of 2015, accounting for 59.8% of the total. Concerning the major industries involved, the stock in the leasing and business services industry amounted to US$313,504.13 million, accounting for 47.7% of the total; the stock in the wholesale and retail sales industry amounted to US$90,155.13 million, accounting for 13.7% of the total; the stock in the financial industry amounted to US$898,61.11 million, or 13.7% of the total; the stock in the mining industry amounted to US$51,539.39 million, or 7.8% of the total; the stock in the transportation, warehousing and postal services industry amounted to US$29,069.34 million, or 4.4% of the total; the stock in the manufacturing industry amounted to US$25,033.34 million, or 3.8% of the total; the stock in the real estate industry amounted to US$20,378 million, accounting for 3.1% of the total; the stock in life services, maintenance and other services amounted to US$12,141.45 million, or 1.9% of the total; the stock in information transmission, software and information technology services amounted to US$11,595.7 million, or 1.8% of the total; the stock in the construction industry and in power, heat, gas and water production and supply accounted for 0.5% of the total respectively; the stock in scientific research and technical services accounted for 0.4% of the total, while that in other industries accounted for 0.7% (see Table 1.22). (3)  Investment in the European Union China’s investment in the EU in 2015 fell significantly from that in 2014. China’s investment flow in the EU in 2015 stood at US$5.48 billion, down by 44% from 2014, accounting for 3.8% of its total OFDI flow, a drop of 4.1 percentage points from 2014, and accounting for 77% of its investment flow in Europe. In terms of the destination countries, the Netherlands topped the list with a flow of US$13.463 billion, 13 times that of 2014 (mainly caused by the withdrawal of Chinese investment from Luxembourg and transfer of the same to the Netherlands), accounting for 245.7% of the flow to the EU. The UK ranked second with a flow of US$1.848 billion, a year-on-year increase of 23.3%,

46  Development overview Table 1.22 Main recipient industries of OFDI from the Chinese mainland in the Hong Kong SAR in 2015 Industry

Flow (US$10,000)

Share (%)

Stock (US$10,000)

Share (%)

Leasing and business services Wholesale and retail sales Finance Mining Transportation, warehousing and postal services Manufacturing Real estate Life services, maintenance and other services Information transmission, software and information technology services Construction Power, heat, gas and water production and supply Scientific research and technical services Culture, sports and entertainment Agriculture, forestry, animal husbandry and fishery Water, environment and public facilities management Other Total

3,570,424

39.8

31,350,413

47.7

1,431,795

15.9

9,015,513

13.7

1,644,792 205,700 158,764

18.3 2.3 1.8

8,986,111 5,153,939 2,906,934

13.7 7.8 4.4

578,225 549,108 129,913

6.4 6.1 1.4

2,503,334 2,037,800 1,214,145

3.8 3.1 1.9

275,049

3.1

1,159,570

1.8

83,400 87,184

0.9 1.0

339,174 327,620

0.5 0.5

64,036

0.7

261,311

0.4

77,857

0.9

147,048

0.2

62,947

0.7

144,489

0.2

51,772

0.6

94,706

0.2

8,012 8,978,978

0.1 100

43,417 50,991,983

0.1 100

accounting for 33.7% of the flow to the EU. Germany ranked third with a flow of US$410 million, down 71.5% from a year earlier, accounting for 7.5% of the flow to the EU. China’s investment in Sweden, Austria, Bulgaria, Finland, Spain and Romania saw relatively rapid growth. Concerning the recipient industries of the investment, overseas Chinese enterprises adjusted their investment in the leasing and business services industry in the EU, while the investment in other major areas grew rapidly. China’s investment flow to the manufacturing industry, mainly going to the Netherlands, the United Kingdom, Sweden, and Austria, amounted to US$3,023.23 million, a year-on-year increase of 246.3%, accounting for 55.2% of its investment in the

China investment analysis report 2015  47 EU. The investment flow to the financial industry, mainly distributed in the Netherlands, France, the United Kingdom, and Luxembourg, amounted to US$2,155.46 million, up 154.1%, accounting for 39.3% of the investment in the EU. China’s investment flow to the scientific research and technical services industry, mainly in the UK, stood at US$586.66 million, up 141.6% year-onyear, accounting for 10.7% of its investment in the EU. Its investment flow to agriculture, forestry, animal husbandry and fishery, mainly distributed in Germany, Bulgaria and Spain, amounted to US$410.62 million, up 144.6%, accounting for 7.5% of China’s investment in the EU. Its investment flow to the accommodation and catering industry, mainly in France, amounted to US$369.3 million, or 6.7% of its investment in the EU, 12.7 times higher than in 2014. As of the end of 2015, China’s investment stock in the EU totaled US$64,460.13 million, accounting for 5.9% of its total stock and 76% of its investment stock in Europe. The stock in six countries exceeded US$3 billion, including the Netherlands, the United Kingdom, Luxembourg, Germany, France and Sweden. Concerning the distribution in different industries, the mining industry received US$15,382.38 million, accounting for 23.9% of the total, mainly in the Netherlands, France, Luxembourg, and Belgium; the financial industry received US$15,021.23 million, accounting for 23.3% of the total, mainly in the United Kingdom, Luxembourg, Germany, the Netherlands, France, and Italy; the manufacturing industry received US$12,716.09 million, accounting for 19.7% of the total, mainly distributed in Sweden, the United Kingdom, Germany, the Netherlands, France, Italy, Hungary, Luxembourg, Romania, Poland, and Spain; leasing and business services received US$6,309.54 million, accounting for 9.8% of the total, mainly in the Netherlands, the United Kingdom, Luxembourg, Germany, and Ireland; wholesale and retail sales received US$5,254.67 million, accounting for 8.2% of the total, mainly in the Netherlands, the United Kingdom, Germany, Luxembourg, Sweden, Italy, Spain, and Greece; real estate received US$2,984.51 million, accounting for 4.6% of the total, mainly in the United Kingdom; the scientific research and technical services industry received US$1,544.05 million, accounting for 2.4% of the total, mainly distributed in the United Kingdom, Hungary, Germany, the Czech Republic, and Sweden; the transportation, warehousing and postal services industry received US$1,173.58 million, or 1.8% of the total. The construction industry received 1.5% of the total and agriculture, forestry, animal husbandry and fishery received 1.3% (see Table 1.23). As of the end of 2015, China set up 2,300 enterprises in the EU through direct investment, covering all 28 EU member countries and employing 90,000 foreign employees. (4)  Investment in ASEAN countries In 2015, China’s direct investment in the 10 ASEAN countries grew rapidly, with the investment flow exceeding US$10 billion for the first time and hitting a record high of US$14,604.31 million, a year-on-year increase of 87.0%,

48  Development overview Table 1.23  Major recipient industries of China’s OFDI in the EU in 2015 Industry

Flow (US$10,000)

Share (%)

Stock (US$10,000)

Share (%)

Mining Finance Manufacturing Leasing and business services Wholesale and retail sales Real estate Scientific research and technical services Transportation, warehousing and postal services Construction Agriculture, forestry, animal husbandry and fishery Power, heat, gas and water production and supply Accommodation and catering Life services, maintenance and other services Information transmission, software and information technology services Education Culture, sports and entertainment Other Total

1,014,292 215,546 302,323 –1,161,029

185.1 39.3 55.2 –211.9

1,538,238 1,502,123 1,271,609 630,954

23.9 23.3 19.7 9.8

21,026

3.8

525,467

8.2

5,684 58,666

1.0 10.7

298,451 154,405

4.6 2.4

2,886

0.5

117,358

1.8

2,411 41,062

0.4 7.5

98,999 82,672

1.5 1.3

3,171

0.6

78,751

1.2

36,930

6.8

75,115

1.2

1,976

0.4

28,426

0.4

1,029

0.2

25,883

0.4

438 1,495

0.1 0.3

10,134 7,012

0.2 0.1

70 547,976

0.0 100

416 6,446,013

0.0 100

accounting for 10.0% of its total OFDI flow and 13.5% of the investment flow to Asia. The stock amounted to US$62,715.96 million, accounting for 5.7% of the total stock and 8.2% of the investment stock in Asia. As of the end of 2015, China set up more than 3,600 enterprises in ASEAN countries through direct investment, employing 315,000 foreign employees. Specifically, in 2015, the flow of China’s investment to ASEAN countries was as follows: US$6,673.84 million went to leasing and business services, up 438.6%, accounting for 45.7% of the total, mainly to Singapore, Vietnam, Malaysia and Indonesia; US$263.944 million to the manufacturing industry, accounting for 18.1% of the total, mainly to Indonesia, Thailand and Singapore;

China investment analysis report 2015  49 US$174.24 million to the wholesale and retail sales industry, accounting for 11.9% of the total, mainly to Singapore, Thailand, Cambodia, and Malaysia; US$911.78 million to the financial industry, accounting for 6.2% of the total, mainly to Singapore, Myanmar, Cambodia, and Vietnam; US$778.04 million to water, environment and public facilities management, accounting for 5.3% of the total, mainly to Singapore; US$573.27 million to the construction ­industry, accounting for 3.9% of the total, mainly to Singapore, Cambodia and Indonesia; US$504.32 million to agriculture, forestry, animal husbandry and fishery, accounting for 3.5% of the total, mainly to Cambodia, Laos and Indonesia; US$310.8 million to the power, heat, gas and water production and supply industry, accounting for 2.1% of the total, mainly to Indonesia and Myanmar. At the end of 2015, China’s investment stock in ASEAN countries amounted to US$62,715.96 million. The distribution of the stock in industries was as follows: US$16,088.52 million in leasing and business services, 25.7% of the total, mainly in Singapore, Indonesia, Laos, Vietnam, and the Philippines; and US$9,358.71 million, or 14.9% of the total, in the manufacturing industry. China’s investment in manufacturing had the widest coverage and most ASEAN countries received more than US$100 million, specifically, Indonesia (US$1.818 billion), Vietnam (US$1.708 billion), Thailand (US$1.51 billion), Singapore (US$1.352 billion), Laos (US$900 million), Malaysia (US$899 million), Cambodia (US$790 million), Myanmar (US$253 million) and the Philippines (US$118 million). US$7,865.7 million was invested in power, heat, gas and water production and supply, accounting for 12.5% of the total, mainly in Singapore, Myanmar, Laos, Indonesia, and Cambodia; US$7,537.21 million in the wholesale and retail sales industry, accounting for 12.0% of the total, mainly in Singapore, Indonesia, Vietnam, Thailand, the Philippines, and Malaysia; ­ US$6,247.43 million in the mining industry, accounting for 10.0% of the total, mainly in Indonesia, Myanmar, Singapore, Laos, Vietnam, Cambodia, and Thailand; US$4,356.19 million in the financial industry, accounting for 6.9% of the total, mainly in Singapore, Thailand, Indonesia, Malaysia and Vietnam; US$38.61.74 million in the construction industry, accounting for 6.2% of the total, mainly in Singapore, Cambodia, Laos, Malaysia, Vietnam, Indonesia and Thailand; US$2,314.28 million in agriculture, forestry, animal husbandry and fishery, accounting for 3.7% of the total, mainly in Laos, Cambodia, Indonesia, Singapore, Myanmar, Thailand and Vietnam; US$1782.6 million in transportation, warehousing and postal services, accounting for 2.8% of the total, mainly in Singapore and Thailand. The stock in the real estate industry accounted for 1.9% of the total, mainly in Singapore, Laos, etc. The stock in water, environment and public facilities management industry accounted for 1.3% of the total; that in scientific research and technical services accounted for 1.2% of the total; that in information transmission, software and information technology services accounted for 0.4% of the total; that in life services, maintenance and other ­services accounted for 0.3% of the total; and that in accommodation and catering accounted for 0.2% of the total (see Table 1.24).

50  Development overview Table 1.24  Main recipient industries of China’s OFDI in ASEAN countries in 2015 Industry Leasing and business services Manufacturing Power, heat, gas and water production and supply Wholesale and retail sales Mining Finance Construction Agriculture, forestry, animal husbandry and fishery Transportation, warehousing and postal services Real estate Water, environment and public facilities management Scientific research and technical services Information transmission, software and information technology services Life services, maintenance and other services Accommodation and catering Culture, sports and entertainment Education Other Total

Flow (US$10,000)

Share (%)

Stock (US$10,000)

Share (%)

667,384

45.7

1,608,852

25.7

263,944 31,080

18.1 2.1

935,871 786,570

14.9 12.5

174,324

11.9

753,721

12.0

3,895 91,178 57,327 50,432

0.3 6.2 3.9 3.5

624,743 435,619 386,174 231,428

10.0 6.9 6.2 3.7

6,092

0.4

178,260

2.8

17,583 77,804

1.2 5.3

116,163 81,128

1.9 1.3

8,479

0.6

74,361

1.2

6,347

0.4

24,607

0.4

3,922

0.3

18,259

0.3

1,319 1,765

0.1 0.1

9,995 4,678

0.2 0.1

–2,444 – 1,460,431

–0.2 – 100

1,079 88 6,271,596

– – 100

(5)  Investment in the United States In 2015, China’s investment flow to the United States totaled US$8,028.67 million, up 5.7% from 2014, a record high of China’s OFDI in the United States, accounting for 5.5% of China’s total OFDI flow. As of the end of 2015, China’s investment stock in the United States stood at US$40,801.95 million, accounting for 3.7% of China’s OFDI stock, and overseas Chinese enterprises employed more than 80,000 local employees in the United States. In 2015, China’s investment in the United States covered a wide range of industries. The investment flow in three industries exceeded US$1 billion. ­Specifically, the manufacturing industry topped the list with an investment flow of

China investment analysis report 2015  51 US$4,008.45 million, up 122.2% year-on-year, accounting for 49.9% of China’s investment flow to the United States; the leasing and business services industry ranked second with a flow of US$2,339.31 million, up by 293.9% from 2014, accounting for 27.9% of the total; the scientific research and technical services industry ranked third with a flow of US$1,227.63 million, up by 447% from 2014, accounting for 15.3% of the total. Following them on the list were the wholesale and retail sales industry with a flow of US$894.39 million and a share of 11.1%, the construction industry with a flow of US$400.02 million and a share of 5.0%, the culture, sport and entertainment industry with a flow of US$375.14 million and a share of 4.7%, the information transmission, software and information technology services industry with a flow of US$310.31 million and a share of 3.9%, and the real estate industry with a flow of US$183.52 million and a share of 2.3%. At the end of 2015, China’s investment stock in the United States stood at US$40,801.95 million. The distribution of the stock in industries was as follows: the manufacturing industry topped the list with a stock of US$10,718.82 million, accounting for 26.3% of China’s investment stock in the United States, mainly distributed in the automobile manufacturing industry, the ferrous metal smelting, rolling and processing industry, the pharmaceutical manufacturing industry, the special-purpose equipment manufacturing industry, the general-purpose equipment manufacturing industry, the railway, ship, aerospace and other transportation equipment manufacturing industry, the non-metallic mineral products industry, the rubber and plastic products industry, the metal products industry, etc. The stock in the financial industry amounted to US$10,315.35 million, accounting for 25.3% of China’s investment stock in the United States; the stock in the leasing and business services industry amounted to US$3,716.05 million, or 9.1% of the total; that in the wholesale and retail industry amounted to US$3,410.05 million, or 8.4% of the total; that in the real estate industry amounted to US$3,406.02 million, accounting for 8.3% of the total; that in the mining industry amounted to US$2,902.06 million, or 7.1% of the total; that in the scientific research and technical services industry, the construction industry and the transportation, warehousing and postal services industry respectively accounted for 4.5%, 2.3% and 1.6% of the total (see Table 1.25). (6)  Investment in Australia China’s direct investment in Australia slowed down in 2015. China’s direct investment flow to Australia in 2015 amounted to US$3401.31 million, down 16% from 2014, accounting for 2.3% of the total flow. As a result of the continuous decline in the prices of bulk commodities, China’s investment flows to the mining industry of Australia dropped sharply (down by 85.8% year-on-year), leading to a nearly 20% decrease in China’s investment flow to Australia. But China’s investment in other industries in Australia grew fast. The investment flow to the real estate industry stood at US$942.14 million, up by 166.1% from 2014, accounting for 27.7% of China’s OFDI flow to Australia. The flow to the leasing and business services industry amounted to US$457.81 million, up by

52  Development overview Table 1.25  Main recipient industries of China’s direct investment in the U.S. in 2015 Industry

Flow (US$10,000)

Share (%)

Stock (US$10,000)

Share (%)

Manufacturing Finance Leasing and business services Wholesale and retail sales Real estate Mining Scientific research and technical services Construction Transportation, warehousing and postal services Information transmission, software and information technology services Culture, sports and entertainment Water, environment and public facilities management Power, heat, gas and water production and supply Life services, maintenance and other services Accommodation and catering Agriculture, forestry, animal husbandry and fishery Education Other Total

400,845 –44,700 233,931 89,439 18,352 –155,614 122,763

49.9 –5.6 27.9 11.1 2.3 –19.4 15.3

1,071,882 1,031,535 371,605 341,005 340,602 290,206 182,094

26.3 25.3 9.1 8.4 8.3 7.1 4.5

40,002 1,874

5.0 0.2

95,747 67,201

2.3 1.6

31,031

3.9

54,596

1.3

37,514

4.7

53,253

1.3

6,372

0.8

40,614

1.0

3,063

0.4

39,630

1.0

6,891

0.9

36,491

0.9

7,999 8,651

1.0 1.1

31,505 22,122

0.8 0.5

4,341 113 802,867

0.5 – 100

7,609 2,498 4,080,195

0.2 0.1 100

129% from 2014, accounting for 13.5% of China’s investment flow to Australia. The flow to the financial industry amounted to US$401.24 million, up by 557% year-on-year, accounting for 11.8% of the total. The flow to the transportation, warehousing and postal services industry rose from merely US$4.27 million in 2014 to US$353.14 million, accounting for 10.4% of the total. The flow to the manufacturing industry amounted to US$306.43 million, up by 246.8% from 2014, accounting for 9.0% of the total. The flow to agriculture, forestry, animal husbandry and fishery totaled US$184.67 million, up by 146.9% from 2014, accounting for 5.4% of the total. At the end of 2015, China’s investment stock in Australia amounted to US$28,373.85 million, accounting for 2.6% of China’s OFDI stock and 88.4% of its investment stock in Oceania. China established nearly 800 overseas enterprises in Australia, employing nearly 10,000 local employees. The distribution of the stock in main industries was as follows: US$16,824.35 million in the mining industry, accounting for 59.3% of the total; US$2,827.73 million in the real estate

China investment analysis report 2015  53 Table 1.26  Major recipient industries for China’s OFDI in Australia in 2015 Industry Mining Real estate Finance Leasing and business services Manufacturing Wholesale and retail sales Agriculture, forestry, animal husbandry and fishery Transportation, warehousing and postal services Water, environment and public facilities management Construction Power, heat, gas and water production and supply Life services, maintenance and other services Scientific research and technical services Accommodation and catering Other Total

Flow (US$10,000)

Share (%)

Stock (US$10,000)

Share (%)

43,730 94,214 40,124 45,781

12.9 27.7 11.8 13.5

1,682,435 282,773 245,100 216,457

59.3 10.0 8.6 7.6

30,643 14,418

9.0 4.2

113,655 79,527

4.0 2.8

18,467

5.4

55,261

1.9

35,314

10.4

42,994

1.5

–

33,534

1.2

9,854 –

2.9 –

24,151 19,767

0.9 0.7

173

0.1

16,548

0.6

2,797

0.8

12,848

0.5

3,549

1.0

7,523

0.3

1,068 340,131

0.3 100

4,811 2,837,385

0.1 100

–

industry, accounting for 10.0% of the total; US$2,451 million in the financial industry, accounting for 8.6% of the total; US$2,164.57 million in the leasing and business services industry, accounting for 7.6% of the total; US$1,136.55 million in the manufacturing industry, accounting for 4.0% of the total; US$795.27 million in the wholesale and retail sales industry, accounting for 2.8% of the total; US$552.61 million in agriculture, forestry, animal husbandry and fishery, accounting for 1.9% of the total (see Table 1.26). (7)  Investment in Russia In 2015, China’s direct investment in Russia grew rapidly. The flow amounted to US$2,960.86 million, up by 367.3% year-on-year, accounting for 2% of China’s OFDI flow and 41.6% of China’s OFDI flow to Europe. Concerning the flow to different industries, China’s investment in Russia was mainly concentrated in

54  Development overview mining (47.6%), finance (25.9%), agriculture, forestry, animal husbandry and fisheries (11.7%), manufacturing (9.3%), life services, maintenance and other services (1.6%), leasing and business services (1.3%), scientific research and technical services (0.8%), etc. At the end of 2015, China’s investment stock in Russia totaled US$14,019.63 million, accounting for 1.3% of China’s OFDI stock and 16.8% of its investment stock in Europe. China set up more than 1,000 overseas enterprises in Russia, employing 41,000 local employees. Concerning the distribution of stock in major industries, the mining industry accounted for 39.9% of the total with a stock of US$5,587.59 million; the manufacturing industry accounted for 22.2% with a stock of US$3,112.6 million; agriculture, forestry, animal husbandry and fishery accounted for 17.6% with a stock of US$2,462.94 million; the leasing and business services industry accounted for 9.4% with a stock of US$1,315.26 million; the wholesale and retail sales industry accounted for 3.0% with a stock of US$423.27 million; the real estate industry accounted for 2.6% with a stock of US$371.41 million; the construction industry accounted for 2.2% with a stock of US$313.01 million; and the financial industry accounted for 1.6% with a stock of US$231.04 million (see Table 1.27).

Table 1.27  Main recipient industries of China’s direct investment in Russia in 2015 Industry

Flow (US$10,000)

Share (%)

Stock (US$10,000)

Share (%)

Mining Manufacturing Agriculture, forestry, animal husbandry and fishery Leasing and business services Wholesale and retail sales Real estate Construction Finance Life services, maintenance and other services Scientific research and technical services Transportation, warehousing and postal services Information transmission, software and information technology services Other Total

141,046 27,625 34,683

47.6 9.3 11.7

558,759 311,260 246,294

39.9 22.2 17.6

3,994

1.3

131,526

9.4

1,602

0.5

42,327

3.0

1,155 1,896 76,784 4,632

0.4 0.6 25.9 1.6

37,141 31,301 23,104 10,783

2.6 2.2 1.6 0.8

2,499

0.8

3,652

0.3

–

–

2,560

0.2

3

–

1,808

0.1

167 296,086

0.3 100

1,448 1,401,963

0.1 100

China investment analysis report 2015  55 4  Chinese investors At the end of 2015, there were 20,207 outward foreign direct investors in China. According to the registration of Chinese investors in the administrative departments for industry and commerce in China, limited liability companies, the most active entities in OFDI, accounted for the largest proportion of 67.4%; private enterprises ranked second with a share of 9.3%; companies limited by shares accounted for 7.7%; state-owned enterprises accounted for 5.8%, down 0.9 percentage points from 2014; foreign-invested enterprises accounted for 2.8%; joint-stock enterprises accounted for 2.3%; enterprises with investment from the Hong Kong SAR, the Macao SAR and Taiwan, China accounted for 1.9%; selfemployment ventures accounted for 0.9%; collective enterprises accounted for 0.4%; and others accounted for 1.5% (see Figure 1.26 and Table 1.28). Among the non-financial outward investors of China, there were 517 stateowned enterprises and state authorities, accounting for only 2.6%, while investing enterprises from various provinces, autonomous regions and municipalities accounted for 97.4%. The top 10 provinces (regions, municipalities) in terms of the number of Chinese investors were Guangdong, Zhejiang, Jiangsu, Shanghai, Beijing, Shandong, Liaoning, Fujian, Hunan and Heilongjiang, accounting for 77.7% of the total number of Chinese investors altogether. Guangdong had the largest number of investors, more than 4,300, accounting for 21.6% of the total. Zhejiang ranked second with a share of 12.4% and Jiangsu ranked third with a share of 9.8%. Nearly 70% of private investing companies were from Zhejiang, Jiangsu, Guangdong, Shanghai, and Shandong. 131,000 of the Chinese investors were in the wholesale and retail industry and the manufacturing industry, accounting for 65% of the total. The wholesale and retail sales industry ranked first in terms of the number of Chinese investors,

Figure 1.26  Chinese investors at the end of 2015, by type of business registration.

56  Development overview Table 1.28  Chinese investors, by type of business registration, at the end of 2015 Type of business registration

Number

Company with limited liability 13,612 Private enterprise 1,879 Company limited by shares 1,559 State-owned enterprise 1,165 Foreign-invested enterprise 562 Joint-stock enterprise 458 Enterprise with investment from Hong Kong 385 SAR, Macao SAR and Taiwan, China Self-employment venture 186 Collective enterprise 88 Other 312 Total 20,207

Share (%) 67.4 9.3 7.7 5.8 2.8 2.3 1.9 0.9 0.4 1.5 100

accounting for 34.4% of the total. The manufacturing industry ranked second with a share of 30.6%, mainly distributed in computer/communications equipment and other electronic equipment manufacturing industry, textile, clothing/ decoration industry, textile industry, special-purpose equipment manufacturing industry, electrical machinery and equipment manufacturing industry, metal products industry, medicine manufacturing industry, raw chemical and chemical products manufacturing industry, communications equipment manufacturing industry, automobile manufacturing industry, rubber and plastic products industry, etc. In addition, the leasing and business services industry accounted for 8.0%, agriculture, forestry, animal husbandry and fishery accounted for 3.8%, accommodation and catering services accounted for 3.3%, information transmission, software and information technology services accounted for 3.1%, and the construction industry accounted for 3.0% (see Figure 1.27 and Table 1.29).

Figure 1.27  Industries of Chinese investors at the end of 2015.

China investment analysis report 2015  57 Table 1.29  Industries of Chinese investors at the end of 2015 Industry

Number

Wholesale and retail sales Manufacturing Leasing and business services Agriculture, forestry, animal husbandry and fishery Accommodation and catering Information transmission, software and information technology services Construction Mining Scientific research and technical services Real estate Transportation, warehousing and postal services Life services, maintenance and other services Culture, sports and entertainment Power, heat, gas and water production and supply Other Total

Share (%)

6,956 6,186 1,616 764 658 627

34.4 30.6 8.0 3.8 3.3 3.1

609 505 442 387 348 333 168 148 460 20,207

3.0 2.5 2.2 1.9 1.7 1.6 0.8 0.7 2.4 100

5  Investing enterprises by region and industry (1)  Investment in nearly 80% of countries and regions At the end of 2015, investors from the Chinese Mainland set up 30,800 enterprises through OFDI in 188 countries (regions), nearly 1,100 more than at the end of 2014, covering nearly 80% of countries (regions). The coverage of overseas Chinese enterprises in Asia stood at 97.9%, the same as in 2014. The coverage was 97.9% in Europe, 87.8% in Africa, 75.0% in North America, 67.3% in Latin America and 50.0% in Oceania (see Table 1.30 and Figure 1.28). Table 1.30  Global distribution of overseas Chinese enterprises at the end of 2015 Continent

Total number of countries (regions) at the end of 2015

Number of countries (regions) covered by China’s overseas enterprises

Coverage rate (%)

Asia Europe Africa North America Latin America Oceania Total

48 49 60 4 49 24 234

46 43 51 3 33 12 188

97.9 87.8 85.0 75.0 67.3 50.0 80.3

Notes The coverage rate is the ratio of the number of overseas Chinese enterprises to the total number of countries and regions. China is included in calculating the number of Asian countries and regions, but excluded in the calculation of coverage.

58  Development overview

Figure 1.28  Coverage of China’s enterprises at the end of 2015, by continent.

Concerning the distribution of China’s enterprises in various countries (regions), overseas Chinese enterprises in Asia amounted to nearly 17,000, accounting for 55.5% of the total, mainly in the Hong Kong SAR, Singapore, Japan, Vietnam, the Republic of Korea, Laos, Indonesia, the United Arab Emirates, Cambodia, Thailand, Mongolia, Malaysia, India, Kazakhstan, etc. ­ Overseas Chinese enterprises in Hong Kong SAR exceeded 9,000, accounting for 30% of the total, making the Hong Kong SAR the region with the most overseas enterprises and the most active investment from the Chinese Mainland. Overseas Chinese enterprises in North America totaled nearly 4,000, accounting for 14.4% of the total, mainly in the United States and Canada. The United States was second only to the Hong Kong SAR in the number of overseas companies set up by enterprises from the Chinese Mainland. Overseas Chinese enterprises in Europe totaled over 3,500, accounting for 11.5% of the total, mainly distributed in Russia, Germany, the UK, the Netherlands, France and Italy Overseas Chinese enterprises in Africa numbered over 3,000, accounting for 9.6% of the total, mainly distributed in Zambia, Nigeria, South Africa, Ethiopia, Tanzania, Ghana, Kenya, Angola, Uganda and Egypt. The number of overseas Chinese enterprises in Latin America was more than 1,700, or 5.7% of the total, mainly in the British Virgin Islands, the Cayman Islands, Brazil, Mexico, Chile, Venezuela, Argentina and Peru. Overseas Chinese enterprises in Oceania amounted to more than 1,000, or 3.3% of the total, mainly in Australia, New Zealand, Papua New Guinea, Fiji and Samoa (see Table 1.31 and Figure 1.29). At the end of 2015, the top 20 countries (regions) in the number of overseas Chinese enterprises were the Hong Kong SAR, the United States, Russia, Australia,

China investment analysis report 2015  59 Table 1.31  Distribution of overseas Chinese enterprises at the end of 2015, by continent Continent

Number of overseas enterprises

Share (%)

Asia North America Europe Africa Latin America Oceania Total

17,108 4,433 3,548 2,769 1,007 919 30,814

55.5 14.4 11.5 9.6 5.7 3.3 100

Figure 1.29 Distribution of overseas Chinese enterprises at the end of 2015, by continent.

Singapore, Germany, Japan, Vietnam, the British Virgin Islands, the Republic of Korea, Canada, Laos, Indonesia, the United Arab Emirates, Cambodia, Thailand, the United Kingdom, Mongolia, the Cayman Islands and Malaysia. The number of overseas Chinese enterprises in these countries (regions) totaled more than 23,000, accounting for 74% of the total. (2)  Concentration in three industries Overseas Chinese enterprises were most concentrated in three industries, namely the wholesale and retail sales industry, the manufacturing industry, and the leasing and business services industry, totaling nearly 20,000, accounting for 64.1% of the total. Specifically, more than 9,000 enterprises were in the wholesale and retail sales industry, accounting for 29.4% of overseas Chinese enterprises, more than 6,600 enterprises were in the manufacturing industry, accounting for 21.4% of overseas Chinese enterprises, more than 4,000 enterprises were in the leasing and business services industry, accounting for 13.2% of overseas Chinese enterprises. In addition, 6.4% of overseas Chinese enterprises were in the construction industry, 4.6% were in agriculture, forestry, animal husbandry and fishery, 4.6% were in the

60  Development overview Table 1.32  Distribution of overseas Chinese enterprises at the end of 2015, by industry Industry

Number of overseas Chinese enterprises

Wholesale and retail sales 9,073 Manufacturing 6,608 Leasing and business services 4,072 Construction 1,959 Mining 1,421 Agriculture, forestry, animal husbandry and fishery 1,408 Scientific research and technical services 1,296 Information transmission, software and information 1,096 technology services Transportation, warehousing and postal services 839 Life services, maintenance and other Services 801 Finance 653 Real estate 449 Power, heat, gas and water production and supply 340 Accommodation and catering 337 Culture, sports and entertainment 289 Water, environment and public facilities management 68 Other 105 Total 30,814

Share (%) 29.4 21.4 13.2 6.4 4.6 4.6 4.2 3.6 2.7 2.6 2.1 1.5 1.1 1.1 0.9 0.2 0.3 100

mining industry, 4.2% were in scientific research and technical services, 3.6% were in information transmission, software and information technology services, 2.7% were in the transportation, warehousing and postal services industry, 2.6% were in the life services, maintenance and other services industry, 2.1% were in the financial industry and 1.5% were in the real estate industry (see Table 1.32).

Figure 1.30 Number of overseas enterprises established by China’s major provinces (regions, municipalities) at the end of 2015. Source: 2015 Statistical Bulletin of China’s Outward Foreign Direct Investment, compiled by the Ministry of Commerce of China, the National Bureau of Statistics of China, and the State Administration of Foreign Exchange of China; World Investment Report 2016 prepared by UNCTAD.

China investment analysis report 2015  61 (3)  Local enterprises in OFDI accounted for more than 80% of the total Concerning the nature of overseas non-financial enterprises, the local enterprises accounted for 86.9% of the total, while the state-owned enterprises and departments only accounted for 13.1%. The top 10 provinces (municipalities) in number of overseas enterprises were Guangdong, Zhejiang, Jiangsu, Shanghai, Shandong, Beijing, Liaoning, Fujian, Henan and Tianjin, the overseas enterprises of which accounting for 69.2% of the total. Guangdong has the largest number of overseas enterprises, accounting for 17.3% of overseas Chinese enterprises. Zhejiang ranked second with a share of 11.6% and Jiangsu ranked third with a share of 8.8% (see Figure 1.30).

Notes   1 In this section, agriculture covers farming, forestry, animal husbandry, fishery and services related to agriculture, forestry, animal husbandry and fishery.   2 Chemical manufacturing industry includes the manufacturing of basic chemical raw materials, fertilizers, pesticides, coating, ink, pigments and similar products, synthetic material, chemical products for special purposes, chemical products for daily use, etc.   3 General-purpose equipment manufacturing industry mainly includes the manufacturing of metalworking machinery, hoisting and transportation equipment, bearings, gears, transmission and driving parts and general-purpose parts and mechanical repair, etc.   4 Special-purpose equipment manufacturing industry mainly includes manufacturing of special equipment for production of food, beverage, tobacco and feed, special equipment for printing, pharmaceutical and daily chemical production, special equipment for textile, clothing and leather industries, special equipment for electronic and electrical machinery, special-purpose machinery for agriculture, forestry, animal husbandry and fishery, medical equipment and appliances, etc.   5 The transportation equipment manufacturing industry mainly includes manufacturing of railway transportation equipment, automobiles, motorcycles, bicycles, ships and floating devices, aerospace vehicles, transportation appliances and other transportation equipment, etc.   6 The communications equipment, computers and other electronic equipment manufacturing industry includes the manufacturing of communications equipment, radar and supporting equipment, radio and television broadcasting equipment, electronic computers, electronic devices, electronic components, household audio-visual equipment and other electronic equipment, etc.  7 The leasing and business services industries cover leasing and business services, including leasing of machinery and equipment and goods for cultural purpose and daily use, corporate management services, legal services, consultancy and investigation, advertising industry, intellectual property services, professional intermediary services, market management, travel agencies and other business services, etc. Other business services include conference and exhibition services, packing services, security services, office services, etc.  8 The total number of foreign-invested enterprises and the actual amount of foreign investment used in the service sector in 2015 refer respectively to the 19,547 enterprises in the industries of transportation, warehousing and postal services, wholesale and retail, accommodation and catering, tourism and hotels, finance, real estate, real estate development and management, leasing and business services, scientific research/technical services and geological surveys, life services and other services,

62  Development overview education, health/social security and social welfare, etc., and the total amount of foreign investment actually used of US$114.044 billion.   9 The wholesale and retail industries, i.e., wholesale and retail, include wholesale and retail of food, beverage, tobacco products, textile, clothing and goods for daily use, cultural and sporting goods and equipment, medicine and medical equipment, mineral products, wholesale of building material and chemical products, machinery, hardware and electronic products, trade brokerage and agencies, recycling and wholesale of recyclable material, comprehensive retail, retail of automobiles, motorcycles, fuel and parts, retail of household appliances and electronic products, hardware, furniture and material for interior decoration, non-store retailing and other forms of retail, etc. 10 Transportation, warehousing and postal services include railway transport, road transport, urban public transport, water transport, air transport, pipeline transport, handling and other transport services, warehousing and postal services. 11 The health, social security and social welfare industry includes health and social work. The health sector includes hospitals, community health care facilities and clinics, outpatient services, family planning services, maternal and child care hospitals (centers, stations), disease control and prevention centers and other health service institutions. Social work includes rest homes, care institutions, care for the elderly and the ­disabled, adoption and asylum for orphans and disabled children with accommodation, social assistance with accommodation, social care and assistance without accommodation and other social work without accommodation. 12 Finance includes the banking, insurance and securities industries and other financial activities. Other financial activities include financial trust and management, financial leasing, financial companies, postal savings, pawn, and so on. 13 The number of Chinese investors are Tier 1 investors (i.e., parent companies) in the Chinese Mainland. 14 Overseas Chinese enterprises established through OFDI refer to overseas enterprises directly owned by Chinese investors or those over which a Chinese investor holds 10% or more voting rights or equivalent rights. 15 The recipient country (region) of OFDI shall be the first destination country (region) of investment from China. 16 China’s state-owned commercial banks include Bank of China, Agricultural Bank of China, Industrial and Commercial Bank of China, China Construction Bank and Bank of Communications. 17 Direct investment refers to cases in which the acquisition funds of Chinese investors or its overseas enterprises are the equity funds of the Chinese investors and loans from Chinese banks (this part is included in OFDI, but does not include overseas loans guaranteed by Chinese investors). 18 Economies in transition include those in Southeast Europe, the Commonwealth of Independent States, and Georgia. Southeast European countries include Albania, Bosnia and Herzegovina, Serbia, Montenegro and Macedonia. The Commonwealth of Independent States includes Armenia, Azerbaijan, Belarus, Kyrgyzstan, Moldova, the Russian Federation, Ukraine, Tajikistan, Kazakhstan, Turkmenistan, and Uzbekistan. 19 Major economies in this section include the Hong Kong SAR, the EU, ASEAN, the USA, Australia and the Russian Federation.

2 Regional inward and outward investment analysis report 2015

(I)  East China 1 Beijing (1)  Recent policies of Beijing to promote inward and outward investment Since 2015, Beijing has actively participated in the economic globalization process and the implementation of the Belt and Road Initiative (BRI), vigorously promoted the comprehensive pilot program for further opening-up of the service sector and issued a series of policies to support and encourage inward and outward investment, broadening the scope of investment activities, improving the development environment and promoting coordination between attracting foreign investment and making overseas investment. 1 )  F U R T H E R O P E N I N G - U P O F T H E S E R V I C E S E C T O R TO PROMOTE TRADE IN SERVICES

In May 2015, the State Council of China approved the Comprehensive Plan of Beijing for the Pilot Program of Further Opening Up the Service Sector. According to the plan, priority was given to the further opening-up of six key areas and the goal was to form a new pattern for the comprehensive opening-up of Beijing’s service sector in line with international practices by relaxing market access control, moving forward with regulation reforms and improving the overall market environment. First, Beijing relaxed restrictions on market access to attract foreign investment to key areas. It has taken steps to simplify the procedures for the settlement of foreign exchange capital for enterprises in Zhongguancun, attract multinational companies to set up joint ventures in Beijing and encourage foreign investment in service outsourcing. Beijing encourages Chinese and foreign cultural enterprises to establish joint ventures, allows foreign investors to set up wholly foreign-owned performing arts brokerage firms, and facilitates foreign financial institutions to set up branches, wholly foreign-owned or joint venture. With relaxed market restrictions, Beijing encourages foreign investment in business

64  Development overview services, and in the transformation and reorganization of Chinese business services enterprises. Beijing will also gradually reduce limits on joint venture medical institutions and wholly foreign-owned not-for-profit hospitals. Second, Beijing deepened the reform of its outward investment management system. It simplified the administrative procedures for outward investment by enterprises and adopted a registration-based management system. Beijing encourages Zhongguancun enterprises to set up overseas R&D institutions and make technology acquisitions overseas. It encourages investors to leverage their own advantages to carry out overseas investment and cooperation activities and supports enterprises to go global. Beijing also worked to promote the orderly outward investment and cooperation by service enterprises. Third, Beijing enhanced its support for both inward and outward investment. It worked to improve the social credit environment, establish standards for market access and expand the import of high-level overseas talents in six key areas of the service sector. Beijing simplified the foreign exchange registration procedures for overseas investment activities, supported overseas mergers and acquisitions (M&A) by enterprises in Beijing and facilitated cross-border investment and financing. It offered more credit support for enterprises in key areas of the service sector in Beijing and facilitated customs clearance. 2 )  B E T T E R G U I D A N C E A N D S E R V I C E S F O R O U T W A R D INVESTMENT TO BUILD ENTERPRISES’ CAPACITY FOR INTERNATIONAL OPERATION

The Implementation Plan of Beijing for Further Facilitating the Development of Enterprise Overseas Investment and Cooperation was issued on November 26, 2015. It requires that enterprises focus on BRI countries and regions, actively contribute to the construction of the three networks and industrialization in Africa, and make efforts to accelerate the further opening-up of Beijing’s service sector and the going-global of its competitive industries, so as to enhance outward investment and cooperation, promote the transformation of the economic growth pattern, and lay a solid foundation for the building of a high-tech, precise and advanced economic structure in Beijing. First, Beijing strives to open up new space for the international development of local enterprises. It enhanced project matchmaking through international investment and trade platforms, guided enterprises to participate in the construction of major infrastructure projects in BRI countries and promoted cooperation with BRI countries on the development of traditional energy, clean and renewable energy, and the establishment of industrial parks or economic and trade parks. Second, Beijing stepped up the efforts to build itself into a global center for science and technology innovation. It has enhanced cooperation with overseas high-tech parks, industrial bases, high-end technology R&D enterprises and modern equipment manufacturing enterprises, set up overseas joint R&D centers, laboratories and technology business incubators (TBIs) and strengthened cross-regional

Regional investment analysis report 2015  65 cooperation between its high-end industrial areas and global science and technology enterprises and financial institutions. Third, Beijing strengthened its cultural exchanges and cooperation with other countries. It promoted the development of trade in cultural products and services, created new models for overseas promotion of cultural services and supported local cultural enterprises to expand overseas investment and cooperation. Fourth, Beijing accelerated the going-global of its service sector. It supported enterprises engaged in science and technology services, business services, and featured medical services to march further into the global market. Fifth, Beijing deepened overseas cooperation for the development and processing of energy resources. It facilitated cooperation in the fields of agriculture, forestry, animal husbandry, fishing and the production and processing of agricultural products, supported competitive enterprises to actively engage in the exploration, development and processing of energy resources and encouraged new energy enterprises to move faster to build overseas energy bases. Sixth, Beijing promoted the building of overseas economic and trade cooperation zones. It encouraged the building of overseas economic and trade cooperation zones with investment from Beijing enterprises, and supported automobile manufacturing giants to invest and build automobile industrial parks in Kazakhstan, Thailand and India. Seventh, Beijing supported the development of outward investment platforms. It supported competitive enterprises to set up outward investment operation centers or management platforms and encouraged enterprises to set up professional service organizations overseas. Eighth, Beijing promoted the transformation and upgrading of overseas project contracting businesses. It encouraged relevant enterprises to seize the opportunity of the development of the “three networks and industrialization” in Africa to promote overseas project cooperation by adopting PPP (Public–Private Partnership), BOT (Build–Operation–Transfer), and SOT (Subsidize in Building, Operate and Transfer) models besides the Engineering Procurement Construction (EPC) model. Ninth, Beijing worked to promote the orderly and healthy development of overseas labor cooperation. It continued to expand the scale of overseas labor cooperation, especially the export of skilled labor in the transportation, healthcare, catering, IT and education industries, strengthen the management of overseas labor cooperation and improve coordination between government bodies, intermediaries and relevant enterprises in terms of labor management. Furthermore, in October 2015, the State Council issued the Decision of the State Council on Temporary Adjustment of Relevant Administrative Review and Approval Matters and Special Access Administrative Measures for Beijing, providing legal basis for the pilot program. Soon after that, 11 opening-up measures and 22 new reform measures were rolled out. In December 2015, Beijing Customs published Several Measures of Beijing Customs to Support the Comprehensive Pilot Program for Further Opening Up the Service Sector in Beijing. It includes 17 measures to support the development of some key areas of the service sector, build air and port trade facilitation zones and launch innovations related to the

66  Development overview customs supervision and control system, providing strong support for the comprehensive pilot program for further opening-up of the service sector in Beijing. (2)  Inward and outward investment of Beijing in 2015 1)  G R O W T H O F I N W A R D A N D O U T W A R D I N V E S T M E N T

In 2015, giving full play to its comprehensive advantages, Beijing focused on expanding the opening-up of its service sector, worked to bring in high-end foreign resources and combine foreign investment with the import of advanced technologies, management expertise and high-quality talents, promoting its transformation and development. At the same time, in line with the going-global strategy of China, Beijing strengthened macro guidance for enterprises to grasp favorable opportunities created by further opening-up and by changes in the domestic and foreign environments, and carry out overseas investment initiatives based on their own advantages. i)  Utilization of foreign capital in Beijing. A total of 1,386 new foreign enterprises were established in Beijing in 2015, an increase of 5.2% year-on-year. The amount of foreign capital actually utilized exceeded US$10 billion for the first time, reaching US$13 billion, an increase of 43.8% over the previous year and a record high. This was the fourteenth consecutive year when Beijing’s actual utilization of foreign capital increased and the total amount utilized over the years exceeded US$100 billion, accounting for 10% of the national total. Beijing has seen the structure of foreign investment improved as finance, science and technology and other industries of the service sector opened up further and much more investment was channeled to key areas. As the first pilot city for further opening-up of the service sector in China, Beijing attracted much investment to its science and technology services, leasing and business services, financial services, wholesale and retail services, information transmission and computer services and software industries (the six major industries). In 2015, Beijing welcomed 1,350 new foreign enterprises in the service sector, an increase of 5.4% year-on-year. The utilization of foreign capital reached US$12.32 billion, an increase of 55.4% year-on-year, accounting for 94.8% of the total foreign capital utilization of the city. The number of new foreign investment projects launched in the six major industries reached 1,068 and the actual utilization of foreign capital was US$9.55 billion, up 10.2% and 62.5% respectively and accounting for 77.1% and 73.5% of the total of Beijing respectively. Foreign investment in financial services and science and technology services increased by 15.7 times and 14% respectively and accounting for 56.4% and 7.6% of the total of Beijing respectively. In addition, foreign investment in life services has been active, with 36 health and medical projects, 51 sports and entertainment projects and 55 catering and resident service projects introduced within the year. Foreign investment was made in more ways, including the M&A of state-owned enterprises (SOEs), additional capital for domestic non-foreign enterprises and cross-border RMB investment. In 2015, Beijing attracted US$9.07 billion of

Regional investment analysis report 2015  67 foreign investment through the M&A of SOEs, accounting for 69.8% of the total; a total of 962 enterprises in Beijing brought in US$18.79 billion of foreign investment through additional capital, accounting for 58.1% of the total contractual foreign investment in Beijing; another 38 enterprises made cross-border RMB investment totaling RMB4.66 billion, accounting for 5.8%. The quality of foreign investment projects has been improved and a growing number of high-end functional institutions such as headquarters and R&D institutions have been set up in Beijing. In 2015, nine new foreign companies set up headquarters in Beijing, making a total of 268, and these included 155 regional headquarters of multinational companies; the number of foreign-funded R&D institutions reached 532, with 29 new ones established in 2015. In total, 38 headquarters and R&D institutions of multinational companies were set up in Beijing within the year, bringing the total number to 800. By the end of 2015, 20 new investment projects were launched in Beijing by Fortune Global 500 companies, bringing the total number to 718 projects by 287 Fortune Global 500 enterprises. The scale of foreign investment projects grew significantly and large projects became much larger. There were 75 large projects valued at over US$10 million and the total investment involved registered US$12.1 billion, an increase of 62.4% year-on-year. This amount accounted for 93.1% of the total foreign investment in Beijing in the year, and represented an average investment of US$160 million, two times higher than the previous year. In particular, 68 out of the 75 large projects were in the service sector, involving a total investment of US$11.53 billion, an increase of 77.9% year-on-year and accounting for 88.7% of the total. The total investment of projects over US$100 million amounted to US$10.55 billion, an increase of 1.7 times year-on-year and accounting for 81.2% of the total. The sources of investment were relatively concentrated. The Hong Kong SAR contributed US$9.93 billion, mainly in financial services, science and technology services, business services and information services, accounting for 76.4% of the total foreign investment in Beijing. The British Virgin Islands (BVI) contributed US$1.9 billion, 14.6% of the total. ii)  Overseas investment of Beijing enterprises. In 2015, Beijing’s total outward foreign direct investment (OFDI) in 581 enterprises in 57 countries and regions reached US$9.555 billion, an increase of 74.95% year-on-year. Outward investment projects in the forms of M&A and equity participation grew rapidly. In 2015, the number of M&A and equity participation projects of Beijing enterprises was 87 and the contractual outward investment reached US$19.97 billion, an increase of 117.5% and 456.3% year-on-year respectively, and their proportion in the city’s total contractual outward investment increased from 32.1% to 61.1%. In addition, there were 131 new outward investment projects and 44 additional capital projects and the contractual outward investment amount of these two categories reached US$8.69 billion and US$4.01 billion respectively, accounting for 26.6% and 12.3% of the total contractual outward investment respectively. Large projects played a significant role. In 2015, Beijing had 40 outward investment projects that involved more than US$100 million of contractual

68  Development overview outward investment, making a total of US$29.88 billion and accounting for 91.5% of the total. Unisplendour Corporation subscribed the additional equity of Western Data with a contracted outward investment of US$4.095 billion, the largest outward investment project of Beijing in recent years. The destinations of Beijing’s outward investment were rather concentrated. In 2015, Beijing enterprises invested in 173 projects in five countries or regions, including the Hong Kong SAR, the United States, the British Virgin Islands (BVI), the Cayman Islands and the Republic of Korea (ROK), 66% of the total number of outward investment projects; and the investment value of these projects reached US$18.73 billion, accounting for 57.3% of the total. 2 )  P R O B L E M S O F I N W A R D A N D O U T W A R D I N V E S T M E N T

In terms of the utilization of foreign investment, restricted by land supply, resource environment and labor costs, Beijing’s traditional advantages in attracting investment weakened and the practice of attracting investment with the advantage in costs of factors was no longer effective. More and more foreign investment projects were wholly foreign-owned, with weak technology spillover effect; the city had limited capacity for taking over industries transferred from other places in the world. The agglomeration effect of foreign headquarters was weak and some headquarters were clearly being hollowed out. Beijing’s surrounding areas offered little support for industrial development in Beijing and the business culture is underdeveloped. In terms of outward investment, enterprises must improve their investment management as they lack experience in the management of large-scale investment and large-scale capital operation and have no suitable human resources management mechanism for such projects. Outward investment faces high risks and investing enterprises are vulnerable to all kinds of risks regarding finance, politics and businesses, given the various systems and mechanisms, policy environments and economic foundation of different countries. Effective strategic cooperation among different enterprises should be strengthened and “service communities” in the form of enterprise alliances, chambers of commerce and professional institutions should be built. 3 )  P R O S P E C T S F O R 2016

During the 13th Five-Year Plan period (2016–2020), Beijing’s inward and outward investment is expected to reach US$100 billion with both FDI and OFDI exceeding US$50 billion. Foreign investment in the service sector will account for over 85% of the total FDI. In 2016, Beijing’s actual utilization of foreign capital is expected to be more than US$13 billion, the same as or slightly higher than that of 2015, an increase of 42.5% over the annual average during the 12th Five-Year Plan period. The growth of OFDI will probably slow down and the total OFDI of the year will be above US$10 billion, an increase of about 10% year-on-year.

Regional investment analysis report 2015  69 i)  Utilization of foreign capital. In 2016, Beijing will work to attract investment in key areas of the service sector identified in the pilot program for further ­opening-up of the service sector, and focus on the exemplary role of inward investment in areas closely related to people’s living standards, industrial upgrading, structural transformation, and innovation. It will strive to introduce international brands of featured catering and retailing, encourage foreign investment in life services such as elderly care and health services and support foreign investment in the transformation and upgrading of traditional industries and the development of urban logistics systems. Beijing will encourage foreign investment in emerging industries such as software and information services and integrated circuit design; it will create a better business environment to attract high-level overseas talents and make its environment more suitable for work and life. At the same time, Beijing will seize the great opportunities brought by building the sub-center and the new airport, and hosting the 2022 Winter Olympics, exploring new growth points for foreign investment utilization. ii)  Outward investment. In 2016, Beijing enterprises will invest in more destinations. Outward investment will go to more than 110 countries and regions on six continents and show a bipolar pattern of growth, that is, investment will grow rapidly in both developed economies such as the United States and less developed regions such as Africa. Beijing will provide more and better services for enterprises making outward investment, establish relevant information service platforms and organize matchmaking events for investment and cooperation projects in BRI countries and regions. (3)  Investment in and from BRI countries in 2015 1 )  S C A L E A N D S T R U C T U R E O F B E I J I N G ’ S I N V E S T M E N T I N B R I COUNTRIES

In 2015, Beijing enterprises invested in 16 projects in BRI countries and the contractual outward investment reached US$3.75 billion, accounting for 11.5% of the total. The city’s investment in BRI countries concentrated in industries such as power, aviation and environmental protection infrastructure, mostly in Asian countries. In 2015, Beijing enterprises invested in 49 projects that involved BRI countries, with new contracts signed for a total outward investment of US$1.211 million and a turnover of US$899 million in Asia, Europe and Africa. The majority of these projects are in Asia. 2 )  P R O S P E C T F O R I N V E S T M E N T I N A N D F R O M B R I C O U N T R I E S I N 2016

In 2016, Beijing, as a key city in the China–Mongolia–Russia Economic Corridor and an important window of North China towards the world, will make strategies according to national policies, its own advantages and the needs of BRI countries, while reinforcing the foundation and highlighting important

70  Development overview tasks. It will form hierarchies of outward investment projects in terms of the destination countries, fields and industries. It will rely on leading and high-quality enterprises, focus on the areas of infrastructure, science and technology, economic and trade, industrial investment, financial services, people-to-people and cultural exchanges and energy resources to launch cooperation with counterparts in BRI countries and make its contribution to the implementation of the BRI. 2 Tianjin (1)  Recent policies of Tianjin to promote inward and outward investment 1 )  I N W A R D A N D O U T W A R D I N V E S T M E N T R E G U L A T I O N S O F T I A N J I N

In accordance with the Catalogue of Investment Projects Subject to Governmental Verifications (2013) approved by China’s State Council, the Administrative Measures for the Approval and Filing of Overseas Investment Projects (NDRC Decree No. 9) issued by the National Development and Reform Commission and the Administrative Measures for the Approval and Filing of Foreign Investment Projects (NDRC Decree No. 12), Tianjin Development and Reform Commission formulated the Tianjin Administrative Measures for the Filing of Overseas Investment Projects and the Tianjin Administrative Measures for the Approval and Filing of Foreign Investment Projects, which were approved by Tianjin Municipal People’s Government in 2014, and issued and implemented on August 22, 2014. It changed Tianjin’s overseas investment project management system and foreign investment management system from an approvalbased one to a filing-based system. At the same time, the power of approving foreign investment projects were further delegated to the authorities of national development zones and the districts and counties. The procedures and requirements for approval were standardized and simplified, and the period needed for the approval was shortened, improving the efficiency. In 2015, Tianjin Development and Reform Commission issued the Circular on Revising Some Provisions of Tianjin Administrative Measures for the Approval and Filing of Foreign Investment Projects and the Circular on the Cancellation of Some Pre-conditions for the Approval and Filing of Foreign Investment and Overseas Investment Projects in Tianjin, further decentralizing the power for the review and approval of foreign investment projects and delegating the power of approval of provinciallevel encouraged foreign investment projects and all the foreign investment projects to be filed to Tianjin Binhai New Area, national development zones and each district and county. At the same time, Tianjin further simplified the declaration requirements for foreign investment and overseas investment projects. Based on the Administrative Measures for Outward Investment (MOC Decree [2014] No. 3) newly revised by the Ministry of Commerce (MOC) of the PRC, Tianjin Commission of Commerce formulated the Detailed Implementation Rules of Tianjin Administrative Measures for Outward Investment (2014). It changed Tianjin’s management system for outward investment enterprises for

Regional investment analysis report 2015  71 a fully approval-based system to a system that combined approval and filing. The municipal government took over more power for review and approval from the Ministry of Commerce, simplified approval requirements and procedures, and shortened the time required. 2 )  I N W A R D A N D O U T W A R D I N V E S T M E N T R E G U L A T I O N S OF CHINA (TIANJIN) PILOT FREE TRADE ZONE (TIANJIN FTZ)

Starting from the second half of 2014, in accordance with the Overall Plan for China (Tianjin) Pilot Free Trade Zone and the Administrative Measures for the Approval and Filing of Overseas Investment Projects (NDRC Decree No. 9) approved by China’s State Council, Tianjin Development and Reform Commission formulated the Tianjin Administrative Measures for the Filing of Foreign Investment and Overseas Investment Projects in China (Tianjin) Free Trade Pilot Zone, and submitted it to Tianjin Municipal People’s Government. On April 17, 2015, the Circular of the General Office of Tianjin Municipal People’s Government on Issuing Two Administrative Measures for the Filing of Inward and Outward Investment in China (Tianjin) Pilot Free Trade Zone (JZBF [2015] No. 3) was issued. China (Tianjin) Pilot FTZ was officially put into operation on April 21, 2015, and adopted a management system based on pre-establishment national treatment and negative list for foreign investment projects and the filing management system for general overseas investment projects. Filing was to be done by the authorities of each part of the Tianjin FTZ. In addition, Tianjin Development and Reform Commission and the Tianjin Commission of Commerce formulated and issued the Opinions on the Implementation of Security Review in China (Tianjin) Free Trade Pilot Zone, in a bid to establish and improve the national security review mechanism for foreign investment in the Tianjin FTZ. In accordance with the Overall Plan for China (Tianjin) Pilot Free Trade Zone approved by the State Council and the Administrative Measures for Outward Investment (MOC Decree [2014] No. 3), the Tianjin Commission of Commerce formulated the Administrative Measures for Outward Investment of China (Tianjin) Pilot Free Trade Zone, and submitted it to Tianjin Municipal People’s Government. On June 19, 2015, the Circular of the General Office of Tianjin Municipal People’s Government on Forwarding the Administrative Measures for Outward Investment of China (Tianjin) Pilot Free Trade Zone Made by Tianjin Commission of Commerce (JZBF [2015] No. 47) was issued. According to the Administrative Measures for Outward Investment of China (Tianjin) Pilot Free Trade Zone, enterprises in the Tianjin FTZ shall file their outward investment projects with the authorities of the relevant parts of the Tianjin FTZ. Specifically, they may call the authorities for consultation, make their applications online, and get the license on the day of their application. At the same time, a paperless management system has been put in place and enterprises only need to submit scanned and sealed versions of their business license and filing application through the online overseas investment management

72  Development overview system. No paper document is required. Foreign investment in the Tianjin FTZ is managed in accordance with the Administrative Measures for Foreign Investment of China (Tianjin) Pilot Free Trade Zone promulgated by the Ministry of Commerce of the PRC. 3 )  R E L E V A N T S U P P O R T I N G P O L I C I E S A N D M E A S U R E S

To encourage local enterprises to go global and participate in international cooperation, Tianjin has formulated and issued a series of supporting and incentive policies. The local commerce authority provided support to enterprises that are eligible to make outward investment and launch cooperation by means of direct subsidies and loans with interest discount. Specifically, the direct subsidies apply to legal, technical and commercial consultation fees, survey and investigation fees incurred by Tianjin enterprises for outward investment; the loans with interest discount refer to loan interest subsidies granted to Tianjin enterprises who have engaged in foreign economic cooperation for more than one year. Eligible enterprises that invest in projects related to resource development, set up or acquire manufacturing facilities in BRI countries are entitled to a subsidy of 5–6% of the amount of the registered capital. The agriculture authorities launched a pilot project of insurance premium subsidies for overseas agricultural investment, and 50% of the subsidy covers 50% of the insurance premiums for agricultural enterprises who went global and purchase outward investment insurance from China Export & Credit Insurance Corporation. Tianjin Municipal Science and Technology Commission set up an Industrial Merger and Acquisition Guidance Fund with an amount of RMB500 million to promote cross-border M&A and it encouraged fund users to cooperate with banks that offered green channel for cross-border M&A loans. In addition, there is also a subsidy for demonstration projects of cooperation with BRI countries. (2)  Inward and outward investment of Tianjin in 2015 1 )  G E N E R A L I N F O R M A T I O N

In 2015, Tianjin welcomed 1,035 new foreign enterprises, an increase of 53.56% year-on-year, with a total contractual investment of US$31.357 billion. The amount of foreign capital actually utilized was US$21.314 billion. The top three sources of foreign investment were the Hong Kong SAR (US$9.347 billion), the Republic of Korea (US$2.694 billion) and Japan (US$2.593 billion). In 2015, Tianjin enterprises set up 197 enterprises and institutions overseas, an increase of 87.6% year-on-year. The total outward investment was US$20.54 billion, including US$7.46 billion from the Chinese side, an increase of 1.6 times year-on-year. In 2015, Tianjin enterprises invested in 43 countries and regions, including US$1.75 billion in 70 enterprises in the Hong Kong SAR and US$443 million in 35 enterprises in the United States.

Regional investment analysis report 2015  73 2 )  M A J O R A C H I E V E M E N T S

i)  Achievements of the reform and innovation in the FTZ. First, the Tianjin FTZ had a clear aggregation effect for foreign investment. Since the establishment of the Tianjin FTZ in 2015, a total of 627 foreign enterprises have been set up there, with US$17.887 billion of contractual investment and US$4.72 billion of foreign capital actually utilized, accounting for 60.58%, 57.04% and 22.33% of the total in Tianjin respectively. Second, the Tianjin FTZ did a good job in implementing its overall plan and relevant institutional innovations. To date, work has started on all of the 90 tasks listed in the overall plan, undertaken by 31 units, and 63% have been completed. Up to 81% of the 175 tasks on the institutional innovation list have been finished, the “ten ones”1 reform of the administrative system has been basically completed, the negative list management system for foreign investment has been implemented, and a new outward investment management system has been basically established. The reform for trade facilitation focusing on customs, inspection and quarantine has been deepened. The market supervision system based on classified credit risk management and the new inspection and quarantine integration system of the Beijing–Tianjin–Hebei region were recognized by the MOC as best innovative practices and promoted all over the country. Third, the Guiding Opinions of the People’s Bank of China on Providing Financial Support for the Construction of China (Tianjin) Pilot Free Trade Zone (hereinafter referred to as “PBOC 30-point guideline”) was issued, and 25 of the 45 major policy measures were implemented. These included supporting enterprises in the Tianjin FTZ to borrow RMB funds from abroad to expand funding channels, putting banks in charge of foreign exchange registration for direct investment and implementing voluntary foreign exchange settlement of capital and foreign debts to reduce the currency conversion cost of enterprises, and allowing eligible financial leasing institutions to collect rent in foreign currencies. ii)  Progress in Tianjin’s building of an open economy. During the 12th Five-Year Plan period (2012–2017), Tianjin implemented a more proactive opening-up strategy, improved its opening-up system, built carriers for opening-up, enhanced cooperation for opening-up, and improved the overall environment for opening-up. The Tianjin FTZ became a new engine for opening-up and development. Initial results were achieved in the coordinated development of the Beijing–Tianjin–Hebei region and remarkable achievements were made in building an open economy. First, steady progress was made in attracting foreign investment to key industries. Tianjin has organized promotional events to attract investment. It formulated industry chain investment attraction plans centering on featured industries such as biopharmaceuticals and auto parts, and secured cooperation intentions through promotional events and visits. Tianjin organized business matchmaking events on high-end platforms. Taking the opportunities of the World Economic Forum Annual Meeting in Davos, the World Economic Forum meeting in Dalian and Boao Forum for Asia that Tianjin leaders attended, Tianjin arranged

74  Development overview more than 50 economic and trade activities with Fortune Global 500 enterprises and industrial leaders in the world. Talks with senior officials of multinational companies, including ABB, Nestlé, Novozymes, SABIC, Hanwha Chemical Corporation and Deloitte Touche Tohmatsu LLC helped the city secure a number of major foreign investment projects. Tianjin focused on attracting investment from the Global 500 enterprises and implemented a Three-Year Action Plan for Attracting Investment from Global 500 Enterprises. It cooperated with regional organizations to strengthen investment attraction by means of roundtable meetings in key industries and overseas activities. So far, 163 Global 500 companies have invested in Tianjin. Second, the Tianjin Economic-Technological Development Area (TEDA) has become more developed. Based on the documents of China’s State Council, Tianjin issued the Opinions on Promoting the Transformation, Upgrading and Innovation-driven Development of Tianjin Economic-Technological Development Area to promote the transformation, upgrading, innovation-driven development of TEDA and launched comprehensive evaluation on TEDA’s development. It formulated the Administrative Measures for Tianjin National Ecological Industrial Demonstration Park to promote its green and low-carbon development. Tianjin focused on the development of featured parks, promoting the building of the China–Europe industrial park in Wuqing Development Area and the ecoindustrial demonstration park in Ziya Development Area. Tianjin mobilized these development areas to provide assistance for Xinjiang Uygur Autonomous Region. The enterprises in the national development areas of TEDA, Xiqing and Wuqing were encouraged to go to Hotan, a major oasis town in southwestern Xinjiang, and hold business matchmaking events in its Yutian Tianjin Industrial Park and Cele Industrial Park, improving the planning of the parks. Third, practical cooperation of the Beijing–Tianjin–Hebei region has been deepened. The industrial and information authorities of the three places signed a strategic cooperation framework agreement for coordinated industrial development and established a joint meeting system. The Strategic Cooperation Framework Agreement for the Coordinated Development of Development Zones in the Beijing–Tianjin–Hebei Region was signed. Together with Beijing and Hebei, Tianjin held a series of industrial transfer matchmaking events and signed contracts for a number of important cooperation projects in areas such as biopharmaceuticals, advanced equipment manufacturing, new energy vehicles and comprehensive utilization of bulk solid waste. In 2015, investment made by enterprises in Beijing and Hebei accounted for 42% of the total investment in Tianjin from other provinces in China, the contractual investment made by Tianjin enterprises in Hebei Province exceeded RMB30 billion, and Tianjin introduced a total of 398 enterprises from Beijing, with an investment of RMB139.657 billion, and 459 enterprises from Hebei Province, with an investment of RMB34.272 billion. Fourth, the Tianjin FTZ played its role in serving the coordinated development of the Beijing–Tianjin–Hebei region. The FTZ has been in smooth operation since April, 2015, and providing services for the Beijing–Tianjin–Hebei region. The Tianjin FTZ management committee held 10 roadshows in Beijing

Regional investment analysis report 2015  75 and Hebei to explain institutional innovations and policy innovations for serving local enterprises there. It launched eight measures to promote the coordinated development of the Beijing–Tianjin–Hebei region and drew up the Measures of China (Tianjin) Pilot Free-Trade Zone for the Coordinated Development of the Beijing–Tianjin–Hebei Region, the Plan of China (Tianjin) Pilot Free-Trade Zone for the Coordinated Development of the Beijing–Tianjin–Hebei Region and the Task Division of China (Tianjin) Pilot Free-Trade Zone for the Coordinated Development of the Beijing–Tianjin–Hebei Region. The customs clearance and inspection integration of the Beijing–Tianjin–Hebei region improved efficiency by 30%. The policies and measures in the “PBOC 30-point guideline” were implemented with the support of the People’s Bank of China and a growing number of enterprises adopted financial leasing for transformation and upgrading. Five direct sales centers for imported goods were set up in Beijing and Hebei and the bonded exhibition and transaction model was promoted across the region. iii)  Enterprises going global faster following the BRI. First, a macro policy was formulated to determine Tianjin’s direction in implementing the BRI. The Tianjin Development and Reform Commission worked with relevant departments to put forward the implementation plan for the BRI, detailing 31 specific tasks and targets. Tianjin mainly supports energy development, textile and garment processing, and chemical manufacturing projects in its effort to implement the BRI and has listed mining in Kazakhstan, garment processing in Myanmar, coal coking and smelting in Thailand and housing construction in Russia as key BRI projects. In 2015, it changed the direction of support to greenfield investment and cooperation projects on resources and energy in its implementation of the BRI. Second, initial progress was made by the Chinese Enterprises Investment and Trade Service Alliance, which aimed to help Chinese companies go global. Under the framework of the going-global service alliance, Tianjin Commission of Commerce signed a strategic cooperation agreement with Tianjin Justice Bureau, Tianjin Lawyer Association, the Export-Import Bank of China (Tianjin Branch), China Export & Credit Insurance Corporation (Tianjin Branch) and the Tianjin Branch of ICBC to establish platforms for overseas investment, cooperation, financing and legal services. Drawing upon the experience and practices of developed provinces and cities such as Nanjing, Shanghai and Guangzhou, Tianjin established a political risk blanket insurance system in line with its conditions and held a press conference to announce the policy. Third, Tianjin worked to spur enterprises to go global. It had the achievements of going-global enterprises reported in mainstream media such as CCTV News and Tianjin Daily to encourage enterprises to expand overseas operation. Tianjin held matchmaking fairs for projects in Thailand, the Isle of Man and other countries and regions, and increased the circulation of outward investment and cooperation guidelines to mobilize a larger number of enterprises to contribute to the implementation of the BRI. In 2016, the Chinese investment in BRI countries and regions increased by four times over the previous year.

76  Development overview Tianjin held BRI investment tax policy training activities and invited partners from Deloitte Touche Tohmatsu LLC to share experience with 100 Chinese enterprises who went global, so as to improve their tax management in transnational operation. Fourth, Tianjin provided services for enterprises to ensure the smooth progress of important projects. The city has improved its project database for outward investment and cooperation and surveyed large enterprises such as Tianjin Pipe (Group) Corporation, Bohaileasing, Tianjin Julong Group and Tianjin Food Group, solving their problems in raw material export and project financing to ensure the smooth progress of their overseas projects. 3 )  P R O B L E M S O F I N W A R D A N D O U T W A R D I N V E S T M E N T

The manufacturing industry struggled in attracting investment. As labor costs increase, foreign enterprises placed more manufacturing orders in Vietnam and other countries. Project reserves were insufficient, especially large projects. Foreign investment across different parts of Tianjin was imbalanced, with some districts and counties utilizing little foreign capital. As for outward investment, Tianjin should improve training on laws and policies and provide professional services such as risk relief for going-global enterprises to improve their risk prevention and control capacity. The consular protection mechanism should be improved, a safety risk early warning mechanism and an emergency response mechanism should be established and improved, and international law enforcement cooperation and administrative mutual assistance should be deepened. 4 )  P R O S P E C T F O R I N W A R D A N D O U T W A R D I N V E S T M E N T I N 2016

Seizing strategic opportunities of China, Tianjin will summarize and promote the experience of the FTZ, promote its innovative policies in various ways and focus on attracting investment to key industries. The actual utilization of foreign investment is expected to increase by 12% in 2016. With the rapid growth of outward investment by private enterprises, the growth rate of outward investment of Tianjin is expected to reach 15% in 2016. (3)  Investment in and from BRI countries in 2015 1 )  I N V E S T M E N T I N B R I C O U N T R I E S

In 2015, a total of 18 BRI countries have made investment or signed letters of intent for investment in Tianjin. Specifically, 57 investment contracts were signed, involving an actual foreign investment of US$1.65 billion, accounting for 8% of the total foreign investment in Tianjin. Such investment mainly came from Malaysia, Thailand, and Singapore of Southeast Asia, Saudi Arabia in West Asia, and Kazakhstan in Central Asia.

Regional investment analysis report 2015  77 2 )  T I A N J I N ’ S I N V E S T M E N T I N B R I C O U N T R I E S

In 2015, Tianjin enterprises established 19 enterprises and institutions in BRI countries, with a total Chinese investment of US$450 million, an increase of 36.3% year-on-year. By the end of 2015, the total number of enterprises and institutions established by Tianjin companies in BRI countries reached 444, with a total Chinese investment of US$3.29 billion, accounting for 28.4% of the total outward investment. The outward investment was mainly for tourism development, commodity trade, chemical manufacturing, agricultural cooperation, real estate development and mining. 3 )  P R O S P E C T F O R I N V E S T M E N T I N A N D F R O M B R I C O U N T R I E S I N 2016

In 2016, Tianjin will actively contribute to the implementation of the BRI, expand investment and cooperation with BRI countries, strengthen BRI-related research and define key countries and industries for cooperation. Focusing on key markets and leading industries and making industry-wide efforts, Tianjin will mobilize its enterprises to contribute to the implementation of the BRI in 2016. Targeted at key markets, Tianjin will work with foreign investment promotion agencies and trade associations to organize business matchmaking events for inward and outward investment and cooperation projects and guide enterprises to join hands on investment. It will serve and guide the development and expansion of existing projects, extend domestic and foreign industry chains, form overseas industrial clusters and industrial parks based on single large-scale projects. Tianjin will actively make efforts to get projects into the national BRI project database, seek more policy support and gradually establish a supporting policy system for the BRI. At the same time, taking advantage of the institutional innovations of the FTZ, Tianjin will make more efforts to attract investment and raise the quality of foreign investment and conduct accurate and targeted investment attraction by taking the opportunities of international exhibitions and conferences and regional forums and analyzing the industrial advantages of other countries. The ultimate goal is to expand the scope of cooperation and increase the investment of BRI countries in Tianjin. 3 Shanghai (1)  Recent policies of Shanghai to promote inward and outward investment In line with national strategies, Shanghai focused on the development of the China (Shanghai) Pilot Free-Trade Zone (Shanghai FTZ) and the goal to build itself into a science and innovation center with global influence, implemented a more proactive strategy for opening-up, launched a series of institutional innovations and accelerated the building of a new system for the open economy. Achievements were great.

78  Development overview 1 )  S H A N G H A I S P E D U P T H E E S T A B L I S H M E N T O F A N E G A T I V E LIST-CENTERED INVESTMENT MANAGEMENT SYSTEM AND PUSHED UP THE LEVEL OF ITS OPENING-UP

In accordance with the Overall Plan of China (Shanghai) Pilot Free Trade Zone and the Plan for Further Promoting the Reform and Opening-up of the China (Shanghai) Pilot Free Trade issued by the State Council, Shanghai focused on institutional innovation, expanded bidirectional opening-up through going-global and bringing-in and accelerating the establishment of a basic institutional framework in line with the current rules of international investment and trade. First, pre-establishment national treatment and the negative list were created for foreign investment management. The negative list first had 190 items and then was reduced to 122 items. A total of 54 measures were launched in two rounds to facilitate the opening-up of many previously closed fields. The scope of businesses open for foreign investment was expanded. The market is now more open and investment much easier to make. Second, filing-based outward investment management became the mainstream. All outward investment projects within the prescribed limit shall be subject to the filing management system and this greatly improved the efficiency of outward investment. At the same time, an overseas investment service promotion mechanism was created based on the first overseas investment service platform to provide comprehensive information support for investors and to provide services during and after the implementation of overseas investment projects. 2 )  S H A N G H A I V I G O R O U S L Y P R O M O T E D T H E R E F O R M O F THE BUSINESS REGISTRATION SYSTEM TO FACILITATE INVESTMENT

Shanghai actively promoted the reform of the business registration system to improve the registration process. It changed from registration based on paid-in capital to registration based on subscribed capital, gradually separated business license from operating permit, and improved the single window system for international traders. All these greatly simplified the company registration procedure. First, Shanghai launched the business registration system where “business licenses come before operating permits.” Shanghai took the lead in promoting the reform of the business registration system to simplify the business registration procedure. It shifted from “operating permits before business licenses” to “business licenses before operating permits,” launched the “three-in-one” business license and a unified social credit code, making it easier for entities to enter the market and do business. Second, registration based on subscribed capital has been put in place. Shanghai was the first to transform from registration of paid-in capital to registration of subscribed capital. Enterprises no longer had to submit the capital verification report for incorporation or change of registered capital. This simplified the declaration process and saved time and cost.

Regional investment analysis report 2015  79 Third, the single window system for international traders has been implemented. To relax restrictions on market access, Shanghai took the lead to establish the single window system in the Shanghai FTZ in order to enable international traders to apply for and get five to seven licenses at a single location. Fourth, Shanghai launched the pilot reform to separate operating permit from business license. In order to solve the business license bottleneck caused by the “business licenses before operating permits” system for enterprises, Shanghai selected more than 110 frequently handled administrative licensing items for the pilot reform that separated operating permit from business license in the Shanghai FTZ. The reform was rolled out in five ways: complete cancellation, filing for notification, notification commitment, simplification, and risk control. This made it much easier for enterprises to obtain business licenses and further unleashed their vitality for innovation and entrepreneurship, thus boosting economic development. 3 )  M O R E I N N O V A T I O N S I N T H E O P E N I N G - U P O F T H E F I N A N C I A L SECTOR TO PROVIDE FINANCIAL SERVICES SUPPORT FOR INWARD AND OUTWARD INVESTMENT

To further open up the financial services industry and promote the internationalization of RMB, Shanghai opened up the financial services industry the Shanghai FTZ wider to the outside world and made innovation in the financial system so that the industry can better serve the real economy and trade and investment can be easier at an acceptable risk level. First, a free trade account system was put in place to facilitate the opening up of and innovation in the financial industry and make risk management easier. Shanghai creatively established a free trade account system, in which cross-border fund transfers can be administrated under macro-prudential principles and the funds in the free trade accounts are free to convert by separate accounting units, thus forming a financial environment which was isolated to some extent from other markets in China and highly integrated with the international financial market. Second, Shanghai has formed a convenient cross-border investment and financing support system. In terms of overseas financing, qualified enterprises and institutions in the Shanghai FTZ may, in accordance with the macro-prudential principles and based on their net assets, directly and independently conduct overseas financing through free trade accounts. The system broke free of the restriction that Chinese enterprises must rely on the amount of foreign debt for overseas financing and opened a channel for funds from the offshore market into the Shanghai FTZ. In respect of outward investment, when an enterprise in the Shanghai FTZ makes cross-border investment, it may directly handle cross-­ border payment and exchange through banks by means of their free trade accounts. The old review and approval requirements for foreign exchange management are no longer applicable. The fund flow from the Shanghai FTZ was thus increased considerably. Third, new cross-border fund management models were created for multinational companies. To improve the liquidity and convenience of the funds of

80  Development overview multinational companies and move towards the goal that the financial services industry works for the real economy and facilitates trade and investment, the Shanghai FTZ launched the two-way cross-border RMB cash pooling and centralized operation of cross-border funds for multinational companies, effectively integrating the domestic accounts and international accounts of multinational companies. Fourth, the financial services industry opened further up. The Shanghai FTZ took the lead to expand the all-round opening-up of the financial sector, offering much more access to foreign private investment in banking, insurance, securities and other industries. 4 )  S H A N G H A I S T E P P E D U P T H E E F F O R T T O B U I L D I T S E L F I N T O A SCIENCE AND TECHNOLOGY INNOVATION CENTER BY FURTHER IMPROVING POLICIES TO SUPPORT FOREIGN-FUNDED R&D CENTERS

Based on the Opinions of Shanghai on Encouraging Foreign Investors to Set Up Research and Development Centers issued in 2012, the Opinions of Shanghai on Encouraging the Development of Foreign-funded Research and Development Centers was issued in 2015 to encourage the development of foreign-funded R&D centers in terms of mechanisms, platform-building, environment, talents and taxation. First, Shanghai established an inter-departmental coordination mechanism for foreign-funded R&D centers. It was initiated by Shanghai Municipal Commission of Commerce, Science and Technology Commission of Shanghai Municipality and Shanghai Municipal Development and Reform Commission and joined by relevant municipal authorities. Shanghai supports the establishment of various forms of foreign-funded R&D centers with global R&D functions. Second, foreign-funded R&D institutions were encouraged to integrate into the local innovation system of Shanghai. Foreign-funded R&D centers are encouraged to develop key industry chain technologies together with higher education institutions, research institutes and enterprises in Shanghai and to actively contribute to major international scientific programs in basic research and on major global issues and major scientific research and engineering projects of the Shanghai Municipal People’s Government. They are also encouraged to trade their technologies and achievements with independent intellectual property rights on the data trading platform of Shanghai, accelerating the transformation of technological achievements. Third, Shanghai created a good environment for innovation. A better development environment was created for foreign-funded R&D centers in that there is now better intellectual property right protection, better environmental evaluation management, easier import and export of R&D equipment, improved management of non-trade foreign exchange payment and support for foreign institutions to compete for various awards. Fourth, Shanghai supports the import and training of talents for innovation. Foreign-funded R&D centers are encouraged to cooperate with the higher education institutions and research institutes in Shanghai to establish a cooperation platform for talents and to train high-quality talents at multiple levels through

Regional investment analysis report 2015  81 various channels, in a bid to satisfy the human resource demand of foreignfunded R&D centers. Shanghai made it easier for foreigners to get residence permits, household registrations, and employment visas. The requirements for getting permanent residence permits have been reduced and application channels have been broadened. The procedures for obtaining employment permits for foreigners have been further simplified. Fifth, Shanghai stepped up its financial and taxation support, implementing national tax policies for scientific and technological innovation and providing more government support for global research and development centers. 5 )  S H A N G H A I I N C R E A S E D T H E S U P P L Y O F P U B L I C S E R V I C E S AND BUILT A NEW SERVICE MECHANISM FOR INVESTMENT AND COOPERATION

Shanghai worked to build a new public service mechanism for outward investment and cooperation that covered information services, financial services, investment promotion, talent training and risk prevention. First, for information services, Shanghai launched a WeChat public account (走出去服务港 Going Global Service Port), which has received more than 1.7 million visits, and compiled and distributed guidelines for outward investment in 16 key countries and four key areas. Second, for financial services, Shanghai linked up a number of large-scale outward investment and cooperation projects with financial institutions, especially the Silk Road Fund and Asian Infrastructure Investment Bank (AIIB). Third, for investment promotion, Shanghai helped coordinate and promote key outward investment and cooperation projects through the follow-up services mechanism for key projects and held 108 investment promotion events. Fourth, for talent training, Shanghai provided training for a total of 4,700 people to help enterprises go global. Fifth, for risk prevention, Shanghai compiled and distributed overseas safety guides and guidelines for the overseas operations of Shanghai enterprises. (2)  Inward and outward investment of Shanghai in 2015 In 2015, Shanghai promoted reforms through opening-up, advanced the coordinated development of bringing-in and going-global, and made new achievements in inward and outward investment. 1 )  O V E R A L L D E V E L O P M E N T A N D C H A R A C T E R I S T I C S O F I N W A R D A N D O U T W A R D I N V E S T M E N T O F S H A N G H A I I N 2015

i)  Overall growth of inward investment. In 2015, Shanghai utilized US$58.94 billion of contractual foreign investment, an increase of 86% over 2014, ranking first in China. The actual utilization of foreign capital was US$18.5 billion, an increase of 1.6%, going up for the sixteenth consecutive year (see Figure 2.1).

82  Development overview

Figure 2.1 Shanghai’s utilization of foreign capital during the 12th Five-Year Plan period.

Shanghai welcomed a total of 6,007 new foreign investment projects in 2015, an increase of 27.9%. By the end of 2015, the city achieved a total contractual foreign investment of US$333.1 billion, actually utilized US$187.6 billion and welcomed 82,000 foreign investment projects. The details are as follows: First, the service sector led the rapid growth of contractual foreign investment. As shown in Figure 2.2, the contractual foreign investment in the service sector increased by 95.7%, and was a main contributor to the growth of contractual investment in Shanghai, accounting for 96.4% of the total foreign investment. Specifically, the financial services industry saw an increase of 2.8 times in foreign investment, with 746 new foreign-funded financial leasing projects, up 2.4 times year-on-year, 38 new foreign-funded commercial factoring projects, and nine foreign portfolio investment projects. Leasing and business services,

Figure 2.2  Contractual foreign investment in 2015, by industry,

Regional investment analysis report 2015  83 commerce and trade, and the real estate industries also witnessed increases of 48%, 30.7% and 22.2% respectively. With resources and environment reaching the ceiling of their carrying capacity and labor costs going up, the contractual foreign investment in the manufacturing industry decreased by 15.9%, and is still on a downward trend. The investment came from many countries and regions and maintained a relatively rapid growth on the whole. Specifically, the contractual foreign investment from Asian countries increased by 90.5%, with that from the Hong Kong SAR up by 1.1 times; the contractual investment from Europe increased by 89.5%, mainly from Germany, the Netherlands and Britain; the contractual investment from North America rose by 83.1%, with that from the United States up by 1.1 times. Second, the actual utilization of foreign investment was low early in the year but picked up later. In 2015, the growth rates of the four quarters were 2.1%, –14.3%, –0.8% and 34.5% respectively, showing a clear V shape. The structure of foreign investment improved continuously. The actual utilization of inward investment in the service sector reached US$15.9 billion, accounting for 86.3% of the total. In addition to the decline in investment in the real estate industry, most of the other major sectors saw growth of foreign investment, especially the financial services industry, mainly financial leasing, commerce and trade, and information services. With investment coming in for large projects, such as that of Shanghai Huahong Grace Semiconductor Manufacturing Corporation, the decline in the actual utilization of foreign investment in the manufacturing industry was reversed, and a significant increase of 42.8% was achieved. The sources of foreign investment in Shanghai diversified. Driven by investment companies and real estate projects, the actual investment from Singapore increased by 1.6 times, that from Europe increased by 33.3% with Germany, France, the Netherlands and Spain as the main contributors. The United States’ investment in Shanghai remained stable thanks to the arrival of additional investment in the Disneyland project. In comparison, investment from the Hong Kong SAR fell by 2.5% and that from Japan fell by 60.7% (see Table 2.1). Third, the quantity and quality of headquarters projects improved. As multinational companies moved faster to invest in Shanghai, the city saw a larger number of headquarters projects, and the headquarters performed more and more functions and exerted much greater influence. As shown in Figure 2.3, another 45 regional headquarters of multinational companies were set up in Shanghai in 2015. Specifically, 15 enterprises, such as Henkel, NXP Semiconductors and Ashland, set up their headquarters in Shanghai for the Asia-Pacific region, and 15 new investment companies were established. By the end of 2015, Shanghai had 535 regional headquarters of multinational companies, including 41 headquarters for the Asia-Pacific region and 312 investment companies. The city hosts the largest number of regional headquarters of multinational companies in mainland China. More than 95% of the regional headquarters have more than two functions, 82% are responsible for making investment decisions, 61% for investment management, 54% for R&D and 35% for procurement and sales. In line with the goal of building Shanghai into a technology and innovation

84  Development overview Table 2.1  Structure of actual foreign investment in 2015

Total Industry

Country/ region

Primary industry Secondary industry Manufacturing Tertiary industry Real estate Leasing and business services Commerce and trade Financial services Information services Transportation, warehousing and postal services Hong Kong SAR Singapore U.S.A. British Virgin Islands Japan Germany Cayman Islands Netherlands Republic of Korea France

Amount (US$100 million)

Year-on-year growth (%)

Proportion (%)

184.6 0.2 25.0 24.9 159.4 56.1 28.2

1.6 615.3 40.6 42.8 –2.7 –32.8 5.0

100 0.1 13.5 13.5 86.3 30.4 15.3

26.6 21.1 7.8 6.3

41.7 84.6 74.3 0.4

14.4 11.4 4.2 3.4

113.0 21.7 10.0 7.5 4.9 4.3 2.6 2.4 1.6 1.3

–2.5 161.5 0.5 –20.8 –60.7 104.5 48.1 82.9 101.3 57.0

61.2 11.8 5.4 4.1 2.7 2.3 1.4 1.3 0.9 0.7

Figure 2.3 Foreign headquarters projects in Shanghai during the 12th Five-Year Plan period.

center with global influence, Shanghai brought in another 15 foreign-funded R&D centers including those of Fresenius Medicine Care and Semiconductor Manufacturing International Corporation, bringing the total number to 396. Fourth, the Shanghai FTZ remained one of the main destinations for foreign investment. Continuous reform of the foreign capital management system and

Regional investment analysis report 2015  85

Figure 2.4  Shanghai’s outward investment during the 12th Five-Year Plan period,

the further opening-up of the service sector drove up the enthusiasm of foreign investors to invest in the Shanghai FTZ. In 2015, 2,802 new foreign investment projects were launched, 46.7% of the total, with the total contractual investment exceeding US$35 billion, 60% of the total. The actual utilization of foreign capital exceeded US$3 billion. Progress was seen in industries including financial leasing, engineering design, travel agencies, game and entertainment equipment production and sales, performing arts brokerage, ship management, and value-added telecommunications services after relevant opening-up measures were implemented, and by the end of 2015, a total of more than 1,300 projects settled in Shanghai with the implementation of 54 measures to expand opening-up. ii) Leapfrog development of outward investment. In 2015, Shanghai enterprises made a total outward direct investment of US$57.32 billion, an increase of 3.7 times over 2014 (see Figure 2.4), including US$39.9 billion invested by the Chinese side in relevant projects, an increase of 2.8 times, and US$16.6 billion actually transferred out, an increase of 3.8 times. All these figures ranked first in China. The amount of newly signed overseas project contracts was US$11.1 billion, an increase of 1.9%, above the US$10 billion mark for the eighth consecutive year. The turnover rose by 0.7% to US$7.5 billion. Generally, there are the following characteristics: First, the structure of OFDI continuously improved. Large M&A projects led Shanghai enterprises onto the global arena. There were 25 M&A projects over US$100 million in value in 2015, and the total investment was US$10.5 billion, an increase of 4.8 times over 2014. The outward investment in high-tech projects took a substantially larger proportion as the actual outward investment in the software and information technology services, communication and electronic equipment manufacturing, automobile manufacturing, scientific research and technology services reached US$5.5 billion, accounting for 33.8% of Shanghai’s total outward investment and representing an increase of 21.4 percentage points over the same period in 2014. The Shanghai FTZ is now a bridgehead for the outflow of Chinese capital, with 636 outward investment projects launched in 2015, accounting for 47.5% of all such projects headed by Shanghai enterprises and involving a registered outward investment of US$22.9 billion, an increase of 6.2 times, and an actual outward investment of US$7.9 billion, an increase of 13 times, accounting for 57.4% and 47.6% of the total of Shanghai respectively. The distribution of investment from the Chinese side in these projects in 2015 is shown in Figure 2.5.

86  Development overview

Figure 2.5  Distribution of Chinese investment in Shanghai’s OFDI projects in 2015.

Second, local international project contractors actively participated in international capacity cooperation. In terms of project size, new overseas project contracts mainly involved large and medium-sized projects, with 42 projects over US$50 million in value in 2015, and the contractual outward investment involved reached US$8.9 billion, accounting for 80.6% of the total of Shanghai. From the perspective of industry, new overseas contracted projects concentrated in fields such as power construction, manufacturing and processing facilities construction and industrial construction. Specifically, the total value of new overseas contracts for power construction projects amounted to US$5 billion, accounting for 45.2% of the total, that of manufacturing and processing facilities construction projects amounted to US$1.8 billion, accounting for 15.9% of the total, and that of industrial construction projects amounted to US$1.4 billion, accounting for 12.5% of the total. From the perspective of market distribution, new overseas contracted projects concentrated in developing countries in Asia and Africa, including the Democratic Republic of the Congo, the Philippines, Turkey, Iraq, the United Arab Emirates, Djibouti and Nigeria. Specifically, the new contractual outward investment in Asia, Africa and Europe amounted to US$5.7 billion, US$3.6 billion and US$1.1 billion respectively, accounting for 51.1%, 32.3% and 9.5% of the total respectively. 2 )  P R O B L E M S O F I N W A R D A N D O U T W A R D INVESTMENT OF SHANGHAI

With slow economic growth, insufficient domestic demand and rising business costs, Shanghai faced many difficulties in inward and outward investment activities. The proportion of additional capital and share expansion in foreign investment continued to decline and the utilization of foreign capital in the manufacturing industry kept going down. With the explosive growth in outward investment, it is all the more urgent to enhance follow-up services and overseas risk prevention.

Regional investment analysis report 2015  87

Figure 2.6 Shanghai’s actual outward investment and its growth rate during the 12th Five-Year Plan period.

i)  Growing volatility in the utilization of foreign capital in the manufacturing industry in recent years. In recent years, the scale of actual foreign investment in Shanghai has continued to grow, but the actual foreign investment in secondary industry has fluctuated dramatically. For example, it fell by 45.2% in 2014 and grew by 42.8% in 2015 (see Figure 2.6). The main reason is the increasingly scarce large-scale foreign investment projects. In one year, investment may flood in for a certain large project, yet in the next year, if there is not another large project, the investment amount would drop. In addition, the operation of foreign-funded industrial enterprises was also a bit sluggish, with revenues and profits falling by 4.4% and 2.2% respectively in 2015, the lowest growth rate among enterprises of all ownership types. ii)  Growing risks for outward investment. Outward investment mainly faces the following risks: First, due diligence and project demonstration are insufficient in the early stage. In particular, there is little analysis of the overseas business environment, excessive optimism in project feasibility studies and wrong investment decisions resulting from the failure to identify key risk factors in corporate governance and financial status in a timely manner. Second, post-investment management and integration is inadequate. Enterprises lack the experience in international operations and the information on the laws and the cultural environment of their investment destinations, leading to problems on management, personnel and cultural integration after the investment is made. Third, there are more security reviews. As protectionism is on the rise in developed countries, national security has become an important basis for extra review and regulation on foreign investment projects, and some countries have taken more restrictive measures in various forms on investment initiatives in areas involving core and advanced technologies, and major resources. This also increases the risks of outward investment.

88  Development overview 3 )  P R O S P E C T S F O R 2016

i)  Development environment in 2016. In 2016, with complex situations at home and abroad, the opening-up and investment and cooperation will still have many uncertainties. First, there is uncertainty about the global economic recovery. Many organizations such as the International Monetary Fund (IMF) and the OECD are not optimistic about the global trade growth in 2016 and the World Bank has recently lowered its projected global growth to 2.9% from 3.3%. Second, China will continue to see a cyclic slowdown in its economic growth. China’s economy is still in the stage of “dealing simultaneously with slower economic growth, difficult structural adjustments and the impacts of previous economic stimulus measures.” The negative effects caused by the mounting downward pressure on the economy and the structural and deep-seated problems accumulated over a long period of time may further manifest themselves. There are still multiple constraints and challenges as China tries to replace old growth drivers with new ones and to transform its economic development pattern. Third, challenges and opportunities will coexist for the inward and outward investment of Shanghai. On the one hand, the new US-led move toward a new international trade and investment rules system has sped up and made breakthroughs, bringing great challenges for China to engage in global and regional economic and trade cooperation. On the other hand, as China launches a new round of effort to open up further, the reform and innovation in the investment and trade of the Shanghai FTZ will pick up pace and the establishment of rules for investment and trade in line with the international standards will accelerate. In particular, the BRI, the going-global of Chinese equipment and international capacity cooperation will all bring new opportunities to the inward and outward investment of Shanghai. ii) Main targets in 2016. In 2016, Shanghai will see great opportunities for inward and outward investment and cooperation with good momentum for development. Growth in its inward and outward investment will be steady. It is expected that the utilization of foreign capital will continue to grow rapidly throughout the year, and the actual inward investment will remain at about US$17 billion. Another 45 regional headquarters of multinational companies will be set up, the amount of OFDI will reach US$30 billion and the total value of new overseas project contracts will reach US$10 billion. iii)  Plans and measures for development. The year of 2016 marks the beginning of China’s 13th Five-Year Plan period. Shanghai will step up its effort for institutional innovations in regard to the Shanghai FTZ, strengthen its position as the “four centers,” and focus on building itself into a scientific and technological innovation center with global influence. Following the new trend in economic globalization and the changes of international investment rules, Shanghai will cultivate its new strengths to engage in and lead international economic cooperation and competition based on the new characteristics of the global investment distribution of multinational companies, constantly improving the quality and benefits of its inward and outward investment.

Regional investment analysis report 2015  89 First, Shanghai will cultivate new impetus for utilizing foreign capital. Shanghai will deepen the reform of the foreign investment management system, promote pre-establishment national treatment, negative list, and measures for expanding the opening-up of the service sector to the entire city. It will work to attract foreign investment, technologies and high-level professionals, further improve the policy support system for headquarters economy and foreignfunded R&D centers, attract a number of regional headquarters of multinational companies and institutions with various functions to settle in Shanghai to bring the total number of regional headquarters in Shanghai to 45 and support the upgrading of existing foreign-funded R&D centers to global R&D centers. Foreign investors will be encouraged to make investment through cross-border M&A, venture capital, offshore business and project outsourcing. Shanghai will build a global investment promotion network, implement the “ten investment promotion plans” and the “one district, one industry” investment attraction plan for smart manufacturing and work with districts and counties, including Songjiang District, Fengxian District and Jinshan District, to import a number of advanced manufacturing projects such as smart manufacturing and new materials. Second, Shanghai will create a new pattern for outward investment. Focusing on industry chain integration, value chain integration and innovation chain integration, Shanghai will encourage local enterprises to make more overseas investment and acquire more overseas R&D centers, marketing networks and resources and energy projects. It will also support enterprises along entire industry chains of the power, textiles, automobiles and chemical industries to go global in clusters. Focusing on the BRI equipment manufacturing and international capacity cooperation, Shanghai will analyze and advance a number of major outward investment and cooperation projects, promoting innovative investment models such as international investment + projects/PPP/BOT/BT (Building–Transfer) and encourage the building of a number of economic and trade cooperation zones and industrial parks overseas. Shanghai will improve the full process system for outward investment services and create a gateway for capital to go out. It will focus on building a public service system for outward investment and cooperation and strengthen the risk prevention for overseas operations. Third, Shanghai will implement the national strategy of building free trade areas. Shanghai will ensure the success of the G20 Ministerial Meeting on Trade and contribute to the research and formulation of global trade and investment rules through platforms like APEC, G20 and WTO in accordance with the actions of China. Taking the opportunity of deepening the implementation of the BRI, Shanghai will speed up the establishment of economic and trade partnerships with more authorities and cities in BRI countries. It will take state-level economic and technological development zones as important carriers for open economy development and as platforms for attracting foreign investment by connecting them with the Shanghai FTZ. It will also support competitive statelevel economic development zones to go global. Shanghai will enhance its communication and exchanges with trade and investment promotion agencies in

90  Development overview Shanghai and bring in a number of international trade and investment organizations, well-known international associations, trade dispute settlement institutions and arbitration agencies. (3)  Investment in and from BRI countries The BRI is a major strategic decision made by the Central Committee of the CPC and the State Council according to the profound changes in the global landscape and the overall situation at home and abroad. The Shanghai Municipal Party Committee and Shanghai Municipal People’s Government attach great importance to the implementation of the BRI and issued the Implementation Plan for Shanghai’s Participation in the Building of the Silk Road Economic Belt and the 21st Century Maritime Silk Road in November 2015, making clear the key areas and requirements for Shanghai’s participation in the implementation of the BRI. Shanghai will give full play to its comparative advantages in line with its own conditions and make steady progress in such areas as economic and trade investment, financial cooperation, people-to-people and cultural exchanges and infrastructure construction. 1 )   O V E R A L L I N V E S T M E N T I N A N D F R O M B R I C O U N T R I E S I N 2015

i)  Investment of BRI countries in Shanghai. In 2015, the BRI countries’ contractual investment in Shanghai reached US$3.175 billion, an increase of 26.5% over 2014, and the actual investment amounted to US$2.228 billion, an increase of 164.8%. The investment from Singapore grew most significantly, with an increase of 161.5% (see Table 2.2). ii)  Shanghai’s investment in BRI countries. In 2015, Shanghai enterprises actively participated in the implementation of the BRI and marched into the markets of many BRI countries. They invested a total of US$9.45 billion in 24 projects in BRI countries, up 10.7 times over 2014. The actual outward investment reached US$2.3 billion, up seven times, accounting for nearly one-sixth of Table 2.2  Investment of BRI countries in Shanghai in 2015  

Amount (US$100 million)

Year-on-year growth (%)

Proportion (%)

Contractual investment Singapore Russia Palestine Actual investment Singapore India Brunei

31.75 27.76 0.80 0.63 22.28 21.70 0.41 0.04

26.5 26.9 – – 164.8 161.5 – 72.1

5.6 4.9 0.1 0.1 12.1 11.8 0.2 0.02

Regional investment analysis report 2015  91 Table 2.3  Shanghai’s investment in BRI countries in 2015 Amount (US$100 million)

Proportion (%)

OFDI by the Chinese side

94.5

23.7

Malaysia Singapore Israel

35.6 24.3 20.3

8.9 6.1 5.1

Value of new project contracts Philippines Indonesia United Arab Emirates

Amount (US$100 million)

Proportion (%)

53.5

48.2

12.2 8.2 6.0

11.0 7.3 5.4

China’s total investment in BRI countries. In 2015, Shanghai enterprises undertook 232 projects in BRI countries, mainly the Philippines and Indonesia in Southeast Asia and the United Arab Emirates in the Middle East, with new contracts signed involving US$5.35 billion of investment, accounting for 48.2% of the total of Shanghai. The turnover was US$4.7 billion, an increase of 7.8% (see Table 2.3). 2 )  P R O S P E C T S F O R 2016

In 2016, in accordance with the general principle of policy coordination, infrastructure connectivity, unimpeded trade, financial integration and strengthened people-to-people ties, Shanghai will focus on areas such as economic and trade investment, financial cooperation, people-to-people exchanges and infrastructure and let enterprises do business in a market-oriented way and strengthen practical cooperation with BRI countries and regions. First, Shanghai will accelerate the formulation of the BRI Partnership Plan in 2016. It will build economic and trade partnerships with cities or relevant institutions in important BRI countries, major cities in countries with which China has signed free trade agreements, cities that have free trade zones and cities with potential for cooperation and having frequent economic and trade exchanges with Shanghai. Based on what was achieved in 2015, Shanghai will strive to establish economic and trade partnerships with more than five cities or investment promotion agencies in 2016. Second, Shanghai will expand investment and trade networks and enhance economic and trade exchanges. It will move faster to connect with major ports, support competitive enterprises in the areas of energy, ports, electricity, telecommunications, advanced equipment, construction projects and services, and strengthen exchanges and cooperation in scientific and technological innovation with relevant countries and regions. Shanghai will join hands with major economic and trade partner cities and potential partner cities to organize high-level investment promotion events to promote economic and trade cooperation and achieve substantial results.

92  Development overview Third, Shanghai will support local financial institutions to participate in the implementation of the BRI. It will promote the cross-border use of the RMB, support overseas institutions and enterprises to issue bonds in the financial market of Shanghai and propose to establish investment and financing institutions of the Shanghai Cooperation Organization (SCO) in Shanghai. Fourth, Shanghai will improve and enhance foreign exchanges. It will vigorously promote the mutually beneficial cooperation and exchanges in the areas of talent training, scientific research, medical services and cultural tourism, give full play to the role of overseas Chinese in promoting exchanges, enhance friendly communication with civil society organization in other countries and regions, and make active efforts to build a city-level network for multilateral cooperation and exchanges. 4 Jiangsu (1)  Recent policies of Jiangsu to promote inward and outward investment In recent years, in order to seize the important historical opportunity of the BRI, carry out the BRI, implement the Guiding Opinions of the State Council on Promoting International Capacity and Equipment Manufacturing Cooperation (GF[2015] No. 30), promote economic restructuring and industrial transformation and upgrading, explore new space for industrial development, create new impetus for economic growth and open wider to the outside world, Jiangsu ­formulated the Opinions on Seizing the Opportunities of the Belt and Road Initiative for Better Overseas Investment, Jiangsu Province’s Action Plan for Promoting International Capacity and Equipment Manufacturing Cooperation and Jiangsu Province’s Three-year Action Plan for Promoting International Capacity and Equipment Manufacturing Cooperation (2016–2018). These greatly promoted inward and outward investment of the province. (2)  Inward and outward investment of Jiangsu in 2015 In 2015, faced with a complex macroeconomic environment and mounting downward pressure on the economy, Jiangsu Province seized the opportunity of major national strategies, actively adapted to and led the economic new normal, expanded its opening-up to the outside world in an all-round way, and moved faster to explore new development space. It delivered stable economic performance, improved economic structure and accelerated transformation. It witnessed quality improvement in foreign investment and rapid growth of outward investment. 1 )  U T I L I Z A T I O N O F F O R E I G N C A P I T A L

In 2015, the growing polarization of the world economy, the tumbling ruble, the interest-rate hikes of the Federal Reserve of the United States, the aftermath of the European debt crisis and commodity price shocks interwove into an extremely complex situation. The utilization of foreign capital in Jiangsu stayed at a low

Regional investment analysis report 2015  93 level after the turning point of 2014, with a smaller scale and a slower pace of growth. That said, the structure of foreign capital utilization was improved and foreign-funded enterprises delivered stable performance while accelerating their transformation and upgrading. i) Less foreign capital utilized. In 2015, Jiangsu Province approved 2,580 new foreign investment projects, down 14.9%; the actual utilization of foreign capital was US$24.27 billion, down 13.8%; the contractual foreign investment reached US$39.36 billion, a decrease of 8.9%. The actual utilization of foreign capital in Jiangsu accounted for 19.2% of China’s total, ranking second in the country. The decline in actual and contractual utilization of foreign capital was milder in 2015 as Suzhou, Nanjing and Wuxi contributed more than 50% of the province’s total foreign capital utilization and achieved growth in contractual foreign investment utilization. ii) Improved structure of foreign capital utilization. First, the proportion of foreign investment utilized in the service sector increased. In 2015, the actual utilization of foreign capital in the service sector reached US$11.32 billion, accounting for 46.6% of the province’s total, an increase of 3.1 percentage points over 2014. Specifically, foreign investment in the modern services industry increased significantly to US$4.981 billion, an increase of 8.6% year-on-year, accounting for 44.02% of the total foreign investment in the service sector, an increase of 6.6 percentage points over 2014. The financial services industry, including financial leasing, saw rapid growth, utilizing US$3.26 billion of foreign capital, an increase of 14.6% year-on-year, contributing 28.8% of the total foreign investment in the service sector, the second largest contribution following that of the real estate industry. Financial services became a new foreign investment growth driver in the service sector and the province was home to 165 foreign-funded financial leasing enterprises. The health, social security and social welfare industry witnessed an increase in foreign investment of 792% year-on-year, foreign investment in the information transmission, software and information technology services industry grew by 71.2%, and that in life services and other services grew by 51.6%. The foreign capital utilization of the real estate industry fell by 25.2% year-on-year, a decrease of 7.9 percentage points over the previous year. Second, the use of foreign capital in strategic emerging industries increased significantly. In 2015, Jiangsu Province saw an increase of 11.6% in the actual utilization of foreign capital in its 10 strategic emerging industries. The advanced manufacturing industry contributed 46.8% of the province’s total foreign capital utilization, an increase of 10.7 percentage points over 2014. Specifically, the actual utilization of foreign capital of the new-generation information technology industry, new energy industry and smart grid industry increased by 60.7%, 79.9% and 76.03% respectively. iii)  More balanced distribution of foreign capital. In 2015, the actual utilization of foreign capital in southern Jiangsu, central Jiangsu, northern Jiangsu and

94  Development overview coastal Jiangsu were US$15.562 billion, US$4.175 billion, US$4.536 billion and US$427 million respectively, accounting for 64.1%, 17.2%, 18.7% and 16.1% of the total respectively. The proportions of central Jiangsu and coastal Jiangsu increased by 0.8 and 0.9 percentage points respectively over 2014. Among the 13 cities in Jiangsu, Nanjing, Wuxi, Zhenjiang, Nantong, Taizhou and Huai’an saw growth in their actual utilization of foreign capital. In terms of the sources of foreign capital, the EU and BRI countries greatly increased their investment in Jiangsu Province. In 2015, the EU invested US$1.819 billion in the province, a year-on-year increase of 32.6%, accounting for 7.5% of the total, an increase of 2.6 percentage points over 2014. The actual use of foreign capital from France, in particular, registered a year-on-year growth of 525.8%. BRI countries invested US$1.295 million in 201 projects in Jiangsu Province. Specifically, the investment from Malaysia, Indonesia and Poland increased by 576.7%, 387.1% and 848.3% respectively. In addition, the actual investment from the offshore companies in the Cayman Islands and Samoa increased by 141.9% and 25% respectively. iv) Capital increment and M&A. In 2015, 1,459 foreign-funded enterprises in Jiangsu added to their capital, with a total contractual foreign investment of US$16.853 billion, up 13.4%, accounting for 42.8% of the total contractual foreign investment in the province, an increase of 8.4 percentage points. Foreign investment for M&A in the province reached US$3.32 billion, up by 28.1%, accounting for 13.7% of the total actually utilized foreign capital. In 2015, a total of 589 foreignfunded enterprises in Suzhou increased their capital, adding US$5.12 billion in contractual foreign investment, accounting for 57.3% of the total. There were 55 new foreign-funded M&A projects, involving a total value of US$170 million. Capital increment and M&A became important ways for foreign capital to flow into Jiangsu. v)  Well-developed new forms of foreign investment. First, an increasing number of regional headquarters and functional institutions of multinational companies settled in the province. In accordance with the Opinions on Encouraging Multinational Corporations to Set Up Regional Headquarters and Functional Institutions in Jiangsu Province issued and revised by relevant departments of Jiangsu Province in 2015, the establishment of regional headquarters and functional institutions of multinational companies in Jiangsu Province shall be encouraged and supported financially. In 2015, five new such regional headquarters and two functional institutions were established in the province. By the end of 2015, the total number of such regional headquarters and functional institutions in Jiangsu reached 141, including 72 regional headquarters and 69 functional institutions. Second, the service industry opened wider to foreign investment. A total of eight new foreign-invested companies, 12 foreign-funded independent R&D institutions, 21 new foreign-funded financial leasing enterprises and three new foreign-funded pilot business factoring enterprises were set up in Jiangsu Province. Suzhou BenQ Medical Center was approved as a wholly foreign-owned hospital, the second of its kind in Jiangsu Province following Nanjing BenQ Medical Center.

Regional investment analysis report 2015  95 Third, the pilot reform of foreign investment in finance steadily advanced. In March 2015, Zhangjiagang Bonded Zone was approved by the State Administration of Foreign Exchange of the PRC as one of the three pilot areas for macro-­ prudential management of foreign debt. In July, the People’s Bank of China approved the pilot project of “cross-border loans” for Taiwan-funded enterprises in Kunshan Experimental Zone. By the end of 2015, 267 enterprises engaged in such borrowing and lending activities, 168 of which did two-way business. The total value involved was RMB18.672 billion, including RMB12.08 billion borrowed and RMB6.664 billion lent (RMB582 million for Taiwan-funded ­enterprises), saving more than RMB300 million in financing costs for related enterprises. The pilot cross-border RMB business in Suzhou Industrial Park showed a good momentum. In 2015, seven enterprises in the park signed eight cross-border RMB loan contracts, with a total value of RMB819 million. Eight enterprises drew RMB809 million and 19 enterprises repaid RMB1.681 billion in cross-border RMB loan principal. In September, the National Development and Reform Commission of the PRC issued a circular to reform the management of foreign debt and implement the filing system for the issuance of foreign debts by enterprises. By the end of 2015, enterprises such as Jiangsu Changjiang Electronics Tech Co., Ltd. and Jiangsu NewHeadLine Development Group Co., Ltd. successively filed for the issuance of foreign debts, more than US$1.3 billion in value. vi)  Stable performance of foreign-funded enterprises. In 2015, the total import and export value of foreign-funded enterprises in Jiangsu reached US$335.856 billion, accounting for 61.6% of the province’s total, including US$193.021 billion in export and US$142.835 billion in import. Equipment import by foreignfunded enterprises totaled US$2.797 billion, an increase of 9.2% year-on-year, up 25.8 percentage points over 2014. Foreign-funded enterprises entered a new stage of investment in Jiangsu. They paid RMB272.017 billion of taxes, up 5.1% yearon-year, indicating that their business performance was good despite unfavorable macroeconomic conditions. Among the 52 key foreign-invested ­enterprises in Jiangsu, 29 performed well and achieved year-on-year increase in main operating income in 2015, accounting for 55.8% of the total; 10 enterprises saw a slight decrease year-on-year in main operating income and normal o­ perating conditions, accounting for 19.2% of the total. Six enterprises’ annual main operating income exceeded RMB10 billion, or 11.5% of the total; they are Dongfeng Yueda Kia Co., Ltd. in Yancheng (RMB47.8 billion), ASUS (Suzhou) (RMB43.2 billion), Changzhou Trina Solar Energy Co., Ltd. (RMB23.2 billion), Changan Mazda Automobile Co., Ltd. (Nanjing) (RMB19.4 billion), BSH Hausgeräte GmbH (Nanjing) (RMB17.5 billion), and SK Hynix (Wuxi) (RMB11.2 billion). 2 )  O V E R S E A S I N V E S T M E N T

In 2015, Jiangsu implemented the BRI and accelerated international capacity cooperation while deepening the reform of its overseas investment management system to enhance the facilitation for its enterprises’ overseas investment. Its overseas investment grew rapidly, with a growing number of large projects and

96  Development overview private enterprises investing in BRI countries, mainly in the secondary and tertiary industries. A total of 879 overseas investment projects were approved (filed) in 2015, up by 19.4% year-on-year, involving a total contractual outward investment of US$10.3 billion, an increase of 42.8% year-on-year. i)  Higher level of overseas investment. In 2015, the average investment amount of Jiangsu enterprises’ overseas investment projects reached US$12.12 million, an increase of US$1.79 million over 2014. Overseas M&A was rather active in 2015, with 170 new M&A and equity participation projects, and a total contractual outward investment of US$2 billion, up by 54.6% and 81.2% respectively, accounting for 19.3% and 19.4% of the province’s total respectively. Non-trade overseas investment grew rapidly. Specifically, the province’s contractual investment from the Chinese side in overseas processing trade projects and resource development projects increased by 94.1% and 225.4%, accounting for 10.9% and 7.2% of the province’s total respectively. A number of major projects were successfully implemented. Suning.com paid US$2.2 billion to acquire additional shares in Alibaba Group, and it was the largest overseas M&A project of Jiangsu Province in 2015. Jiangsu Delong Nickel Industry Co., Ltd. invested US$929 million in a 600,000-ton ferronickel smelting project in Indonesia and Jiangsu Changjiang Electronics Technology Co., Ltd. paid US$780 million for the acquisition of STATS ChipPAC Ltd., a listed company in Singapore. A number of similar major projects were filed with the National Development and Reform Commission. ii) Rapid growth of outward investment in the secondary industry. In 2015, the contractual outward investment of Jiangsu Province’s secondary industry increased by 51.9% year-on-year, up 44.5 percentage points over 2014, accounting for 37.7% of the province’s total, up 3.6 percentage points over 2014. Specifically, the contractual outward investment in the mining industry and the construction industry grew by 180.5% and 155.3% year-on-year respectively. Within the manufacturing industry, the contractual outward investment in non-ferrous metal smelting, general equipment manufacturing, electrical equipment and machinery manufacturing, and communications and computer equipment manufacturing increased by 818.6%, 275.4%, 312.8% and 92.1% year-on-year respectively. Competitive industries of Jiangsu Province stepped up their efforts to go global. The tertiary industry contributed greatly to Jiangsu’s overseas investment with its outward investment accounting for 61.1% of the province’s total, mainly in the wholesale and retail sales industry, leasing and business services and real estate, who together contributed 52% of the province’s total contractual overseas investment. iii)  Asia being the main destination for going-global. In 2015, Jiangsu enterprises invested in 468 projects in Asia, with a total contractual outward investment of US$5.95 billion, an increase of 21.9% and 43.4% over 2014, accounting for 53.2% and 57.7% of the province’s total respectively. The province’s contractual investment in Latin America, Oceania and North America increased by 133.3%, 63.4% and 54.5% respectively, accounting for 11.4%, 6.9% and 12.4% of the total respectively.

Regional investment analysis report 2015  97 iv)  Northern Jiangsu leading the growth. In 2015, contractual outward investment by enterprises in northern Jiangsu reached US$1.79 billion, an increase of 162.3% year-on-year, 119.5 percentage points higher than the figure of the province as a whole. Northern Jiangsu thus contributed 17.4% of the province’s total outward investment, an increase of 6.5 percentage points over 2014. The contractual outward investment from Yancheng, Xuzhou, Huai’an and Lianyungang grew by 212.4%, 196.3%, 116.9% and 111.5% respectively. Southern Jiangsu is the province’s main area for capital outflow, and the number of overseas investment projects of this region reached 647, an increase of 23.2%, accounting for 73.6% of the province’s total. The contractual outward investment registered US$6.83 billion, a year-on-year increase of 29.5%, accounting for 66.3% of the province’s total. The contractual outward investment from central Jiangsu reached US$1.68 billion, a year-on-year increase of 33.6%, accounting for 16.3% of the province’s total. Private enterprises played an important role in outward investment. In 2015, a total of 693 overseas projects were invested in by private enterprises, with a total contractual outward investment of US$7.95 billion, accounting for 78.8% and 77.2% of the province’s total respectively. Smooth progress was made in the acquisition of factories affiliated to Advanced Micro Devices by Nantong Fujitsu Microelectronics Co., Ltd. with an outward investment of US$378 million. (3)  Investment in and from BRI countries in 2015 1 )  I N V E S T M E N T O F B R I C O U N T R I E S I N J I A N G S U P R O V I N C E

In 2015, enterprises in BRI countries invested in 201 projects in Jiangsu Province, a decrease of 11.45% year-on-year. New contractual foreign investment reached US$2.012 billion, up by 21.3% year-on-year. The actual use of foreign capital was US$1.295 billion, down 14.16% over the previous year, accounting for 11.18%, 7.93% and 7.27% of the province’s total respectively. Specifically, the actual use of foreign capital in the manufacturing industry, mainly the manufacturing of communications equipment, computer and other electronic equipment, general equipment and chemicals, accounted for 56.8% of the total investment from BRI countries. The actual use of foreign capital in the service sector accounted for 41.6% of the total, mainly in the wholesale and retail sales industry, real estate, transportation, warehousing and postal services. In 2015, Singapore, Malaysia, Indonesia, Poland and India were the top five BRI countries that invested in Jiangsu Province, and the actually utilized foreign capital was US$704 million, US$360 million, US$92 million, US$41 million and US$20 million respectively. 2 )  J I A N G S U ’ S I N V E S T M E N T I N B R I C O U N T R I E S

In 2015, Jiangsu province invested in 187 projects in BRI countries, with a total contractual outward investment of US$2.73 billion, up by 23.0% and 98.8% respectively, accounting for 21.3% and 26.5% of the province’s total, an increase of 7.5 percentage points over 2014.

98  Development overview Indonesia, Pakistan, Thailand, Malaysia and Singapore are the five BRI countries that received the most investment from Jiangsu, taking more than 60% of the province’s total investment in BRI countries. Mongolia, Kazakhstan, Malaysia, Uzbekistan and Russia are the top five BRI countries that witnessed the fastest growth of investment from Jiangsu, up by tenfold or even hundredfold over the previous year. 3 )  O V E R A L L P L A N A N D I M P O R T A N T M E A S U R E S F O R T H E D E V E L O P M E N T O F A N O P E N E C O N O M Y I N 2016

In developing an open economy, in 2016, Jiangsu aims to increase export and import and maintain stable actual utilization of foreign capital while increasing the contractual outward investment by more than 10%. Jiangsu Province made its 2016 overall plan for reform and the development of an open economy according to the guidelines of the Central Economic Work Conference and the economic work conference of Jiangsu Provincial People’s Government, as well as the major decisions of the central government and the CPC Jiangsu Provincial Committee and Jiangsu People’s ­Government. Focusing on opening-up and development, striving for “three internationalizations,” Jiangsu Province set out to expand opening-up toward other regions in China and toward the outside world, promote the integration of “bringing in” and “going global,” actively contribute to the implementation of the BRI and the development of Yangtze River Economic Belt, and enhance cooperation on international production capacity and equipment manufacturing. It would also strive to improve the quality and efficiency of relevant platforms for further opening-up and build a new pattern of opening-up, striving to make fresh progress in opening-up through the new breakthroughs in open economy. i)  Action plans to fully promote international capacity cooperation. Jiangsu Province will focus on international capacity cooperation to contribute to the BRI, further improve and implement relevant working mechanisms, strengthen management services for overseas cooperation parks and major projects, and support competitive enterprises who are willing to “go global,” and explore the international market. First, Jiangsu Province will focus on major projects and industrial parks. Relevant provincial and municipal authorities must improve the project database for international capacity cooperation, accelerate the progress of major industrial park projects and other projects. Bringing into play the functions of the coordination mechanism between the provincial party committee and provincial people’s government and the bilateral capacity cooperation mechanisms, Jiangsu Province will promote matchmaking activities, strive to get key overseas investment projects into the national project database and obtain support in terms of funding, taxation and finance from the national level. Second, Jiangsu Province will pay attention to mechanisms and coordination. It will hold the first meeting under the joint meeting mechanism for international

Regional investment analysis report 2015  99 capacity cooperation, make clear its key tasks of the year, coordinate and promote the construction of major projects and overseas industrial zones. It will formulate a three-year action plan for international capacity cooperation, study and formulate guidelines concerning the policies and plans of key countries and make clear its objectives, tasks and responsibilities. Third, Jiangsu Province will pay attention to services and actions. It will work to provide sound services to enterprises, industrial parks and projects, coordinate and strengthen the construction of the comprehensive service system for overseas investment and effectively integrate the information resources of governments, enterprises, chambers of commerce and associations, financial institutions and intermediary service organizations at all levels to build a comprehensive service platform for information communication. ii) Focusing on main tasks to study key issues. The 13th Five-Year Plan period is a crucial period for Jiangsu Province to transform its import and export and improve the overall quality, maintain stable growth of foreign capital utilization, grasp the opportunity to increase the quantity of outward investment and the quality of goingglobal efforts, and strive for innovation-driven development and transformation and upgrading of its development zones. Therefore, the Jiangsu Provincial Commission of Development and Reform will carry out research on further opening-up and foster new advantages in international competition in the economic new normal, produce research reports and studies on foreign trade, foreign investment, goingglobal and development zones, proposing core views and policy recommendations for the provincial party committee and provincial people’s government. iii) Seizing development opportunities to speed up the transformation and upgrading of development zones. Jiangsu Province will pay close attention to development zones and report it to relevant departments. It will support the National Development and Reform Commission in the revision of the catalogue of approved development zones in China, complete the preliminary review and related work on the development zones in Jiangsu Province and strive to get more development zones into the national catalogue. While promoting the transformation, upgrading and innovation-driven development of development zones, Jiangsu Province will advance the application for and construction of national transformation and upgrading demonstration development zones in the Yangtze River Economic Belt, support eligible development zones in the province to upgrade to national development zones and work for the establishment of new development zones and the expansion of and plan adjustment for existing provincial development zones, actively supporting the integration and optimization of special customs zones. Jiangsu Province will support the comprehensive opening-up and innovation experiment in the Suzhou Industrial Park, encourage Kunshan Deepen Cross-strait Industrial Cooperation Experimental Zone and the Taiwan-funded enterprises industrial transfer cluster service demonstration area in Huai’an to deepen industrial cooperation with Taiwan enterprises while s­ upporting the construction of cooperative industrial parks such as the China–ROK Industrial Park in Yancheng.

100  Development overview iv)  Adopting new concepts and patterns to use preferential funding abroad. In 2016, following national and provincial economic and social development plans and strategic priorities, Jiangsu Province will focus on ecological and environmental protection, pollution prevention and control, poverty alleviation and development, new urbanization, the integration of medical and health services, vocational education, energy conservation and emission reduction, and modern agriculture; actively engage in the organization, planning and declaration of overseas lending projects of the year; and work to promote the combination of introducing capital, technologies and professionals. It will deepen the reform of the filing system of foreign debt management, strive to land the pilot reform for lumpsum foreign debt management in the province, and actively support enterprises with good credit standing and strong solvency to issue bonds abroad according to national industrial policies and local development strategic priorities. In particular, the raised funds will be mainly invested in projects in line with major national strategies like the BRI, international capacity cooperation and the development of the Yangtze River Economic Belt, as well as major projects with a strong driving force and good social and economic benefits in the fields of transportation infrastructure, new urbanization, strategic emerging industries, information science and technology, environmental protection and modern logistics. 5 Zhejiang (1)  Utilization of foreign capital in 2015 By the end of 2015, Zhejiang had approved 55,905 foreign-invested enterprises, with a total investment of US$514.75 billion, a total contractual foreign investment of US$29.066 billion and an actual foreign investment of US$158.65 billion. The characteristics of Zhejiang’s utilization of foreign capital in 2015 are as follows: 1 )  C O N C E N T R A T I O N I N S O M E A R E A S

In 2015, the contractual foreign investment and actual foreign investment in the five cities in northern Zhejiang, i.e., Hangzhou, Ningbo, Jiaxing and Shaoxing, was US$27.82 billion and US$16.95 billion respectively, accounting for 94.0% and 93.8% of the total of the province, an increase of 5.8 and 3.3 percentage points over 2014 respectively. Specifically, the actual foreign investment utilization in Hangzhou, Ningbo and Jiaxing totaled US$14.03 billion, accounting for 82.7% of the total in the province, making the three the main driving force for FDI attraction in the province. 2 )  G R E A T C O N T R I B U T I O N O F L A R G E - S C A L E P R O J E C T S A N D C A P I T A L INCREMENT PROJECTS

In 2015, Zhejiang approved 131 foreign investment projects that involved over US$30 million of investment each, making a total investment of US$24.39 billion

Regional investment analysis report 2015  101 and contractual foreign investment of US$13.17 billion, accounting for 59.2% and 47.3% of the total respectively. Specifically, 62 projects involved more than US$100 million of investment, making a total of US$13.11 billion and contractual foreign investment of US$5.44 billion. In 2015, the contractual foreign investment increased by US$8.92 billion, accounting for 32.1% of the total, an increase of 5.3% year-on-year. 3 )  R A P I D G R O W T H O F I N V E S T M E N T F R O M E U R O P E A N A N D AMERICAN COUNTRIES

The Hong Kong SAR remained the largest source of foreign investment, with an actual foreign investment of US$10.7 billion, 63.1% of the total, down 5.1% year-on-year. Contractual foreign investment from the European Union (EU) amounted to US$2.31 billion and the actual foreign investment totaled US$1.99 billion, up by 217% and 265% respectively. Specifically, the actual foreign investment from Germany, the UK, the Netherlands and Luxembourg was US$970 million, US$330 million, US$220 million and US$200 million respectively, a year-on-year increase of 9.9, 5.0, 13.1 and 5.1 times respectively. The actual foreign investment from the United States was US$490 million, an increase of 168.6% year-on-year. 4 )  I M P R O V E D I N D U S T R I A L D I S T R I B U T I O N

The contractual foreign investment in the secondary industry was US$10.25 billion and the actual foreign investment in the industry was US$7.19 billion, up by 7.6% and 27% year-on-year respectively, and the latter accounted for 42.4% of the total, up from the 37.5% of the previous year. Specifically, the contractual foreign investment in high-tech projects was US$1.30 billion and the actual foreign investment in the industry was US$1 billion, up by 36.6% and 37.5% year-on-year respectively. The actual foreign investment in the pharmaceutical industry was US$330 million, a fivefold increase from a year earlier. The contractual foreign investment in the tertiary industry was US$17.46 billion and the actual foreign investment in it was US$9.68 billion. The total actual foreign investment, excluding that in real estate, registered a year-on-year increase of 29.5%. The actual foreign investment in the information transmission, computer services and software services industry totaled US$1.12 billion, up by 76.2% year-on-year. The actual foreign investment in the financial services industry was US$820 million, an increase of 273.2% year-on-year. 5 )  T H E I M P O R T A N T R O L E O F F O R E I G N C A P I T A L I N DEVELOPMENT ZONES

In 2015, another 692 projects were approved in the development zones in Zhejiang Province, with a total contractual foreign investment of US$15.3 billion and an actual foreign investment of US$9.94 billion respectively, up by 14.6% and

102  Development overview 9.4%, respectively, accounting for 55.0% and 58.6% of the province’s total respectively. Specifically, the actual foreign investment in development zones of the province was US$3.7 billion, a sharp rise of 37.3% year-on-year. The actual foreign investment in national development zones totaled US$6.24 billion, falling by 2.4% year-on-year, but the decline was narrowing. 6 )  S T E A D Y P R O G R E S S I N I N V E S T M E N T F R O M G L O B A L T O P 5 00 C O M P A N I E S

In 2015, Zhejiang welcomed 24 new enterprises established by the Fortune Global 500 enterprises, with a total foreign investment of US$1.52 billion and a contractual foreign investment of US$900 million. Specifically, the total investment and the contractual investment in Pfizer Biologics (Hangzhou) Co., Ltd. by Pfizer Inc. reached US$300 million and US$100 million respectively; both the total investment and the contractual foreign investment of Mega Bank to establish its Ningbo branch was US$162.8 million. By mid-2016, Zhejiang Province had approved a total of 526 investment enterprises established by 174 of the world’s top 500 companies, with a total foreign investment of US$26.6 billion and a total contractual foreign investment of US$10.8 billion. (2)  Outward investment in 2015 By the end of 2015, a total of 7,816 overseas enterprises and institutions were approved or filed in Zhejiang Province, with an accumulated OFDI of US$41.719 billion. In 2015, Zhejiang enterprises invested in a total of 163 projects in BRI countries with an outward investment of US$4.4 billion, an increase of 3.8 times. The outward investment of Zhejiang Province in 2015 showed the following characteristics: 1

A large number of large-scale projects In 2015, Zhejiang Province invested in 29 overseas projects of over US$100 million with an investment of US$9.94 billion, accounting for 71.5% of the total. 2 Various measures for OFDI to provide strong support for supply-side reform Zhejiang has invested in 135 overseas projects by means of M&A with an amount of US$5.11 billion, with the average M&A amount of individual project up by 1.4 times year-on-year. The outward investment in technology R&D reached US$1.74 billion, an increase of 13.9 times. 3 Faster OFDI in the e-commerce sector In 2015, Zhejiang Province invested in 30 projects in the e-commerce sector, with an investment of about US$150 million. Specifically, 25 enterprises set up their overseas warehouses, established e-commerce platforms or acquired e-commerce companies for technology services, with a total investment of about US$45 million.

Regional investment analysis report 2015  103 4

Steady development of international economic cooperation and large market shares held by large enterprises Zhejiang Province had Zhejiang Construction Investment (S) Pte Ltd. and 30 other large enterprises with over US$50 million in annual turnover, making a total turnover of US$4.18 billion. In fact, 10.6% of enterprises qualified for overseas project contracting completed 67.7% of all overseas projects contracted by turnover. The total turnover in Asia and Africa was US$2.19 billion and US$2.12 billion respectively, both registering an increase of about 19%, accounting for 69.7% of the total when combined. The total turnover of Zhejiang enterprises in BRI countries reached US$1.88 billion, accounting for 30.5% of the total, an increase of about five percentage points over 2014.

(3)  Prospect for the 13th Five-Year Plan period Zhejiang Province made remarkable achievements in outward investment and the utilization of foreign capital in 2015, contributing to the economic growth and industrial transformation and upgrading of the province. Nevertheless, it faced the following problems: First, the structure and quality of foreign investment need to be further improved, the service sector should open wider to the outside world and the foreign investment in producer services and high-tech industries needs to increase. Second, the province is not attractive enough to foreign investment in the future. As various provinces in the Chinese Mainland stepped up their investment attraction efforts, and as the costs of land and labor grew, Zhejiang Province’s competitiveness in attracting foreign capital weakened and the reserve of new projects was limited. Third, the environment for utilizing foreign capital needs to be improved, as there are a limited number of high-quality service platforms and the talents to attract investment. Fourth, there are insufficient interactions between going-global and bringing-in efforts. Enterprises with global presence have not brought in high-end production facilities, advanced technologies or resources. During the 13th Five-Year Plan period, Zhejiang Province will face a new landscape in outward investment and its utilization of foreign capital. The global economic landscape and rules are changing faster. First, the United States has been pushing forward multilateral agreements such as the Trans Pacific Partnership (TPP), Transatlantic Trade and Investment Partnership (TTIP) the and the Trade in Services Agreement (TISA) in an effort to dominate the new international economic and trade rules, resulting in higher barriers to countries out of certain regions. At the same time, global investment liberalization has been promoted. A total of 87 foreign investment policies and measures were issued in 59 countries and economies in 2013, and 61 of them were related to the liberalization, promotion and facilitation of investment, according to World Investment Report 2014 of UNCTAD. Second, the United States and other developed countries pushed re-industrialization and Southeast Asian countries stepped up investment attraction efforts based on the advantage of labor costs, forcing China to

104  Development overview improve the quality of its utilization of foreign capital and to accelerate the transformation toward innovation-driven development. Third, the global economic growth pattern undergoes deep changes. While the U.S. economy is recovering and a new round of interest rate hikes was launched, its foundation is not solid enough and the follow-up policies remain uncertain. The economic growth of Europe and Japan slowed down and faced deflationary pressure. Capital is obviously flying from emerging markets, and as the world economy is confronted with mounting uncertainty, Zhejiang Province is facing growing uncertainties about its outward investment and utilization of foreign capital. China has rolled out strategies for further opening-up in an all-round way. First, the concept of innovative, coordinated, green, open and shared development put forward at the Fifth Plenary Session of the 18th CPC Central Committee and the full implementation of opening-up strategies such as the Belt and Road Initiative and free trade zone development initiatives have created new opportunities for Zhejiang to invest overseas and utilize foreign capital. Second, pilot free trade zones, as national strategic platforms with the most favorable policies, have become the main destinations of foreign capital and important service platforms for outward investment. Third, as China speeds up its transformation to innovation-driven and consumption-driven development, with great market potential, especially with the further relaxation of access to the service market, the service sector is expected to become a new area for utilizing foreign capital in Zhejiang during the 13th Five-Year Plan period. Fourth, the two-way opening-up of the financial services industry and the internationalization of RMB have opened up new space for international capital flows and made indirect investment of funds and equities more active. Zhejiang stepped up its efforts to build an open economy. First, with the close attention of the CPC Zhejiang Provincial Committee and Zhejiang Provincial People’s Government, Zhejiang Province formulated a plan for the development of an open economy for the first time and listed it as one of the key special plans during the 13th Five-Year Plan period. Second, the strategic platforms for the development of an open economy have become stronger. Zhejiang is moving faster to build major opening-up platforms such as Zhoushan river-ocean transportation hub, the China (Hangzhou) and China (Ningbo) cross-border e-commerce comprehensive pilot zones, the Yiwu–Ningbo–Zhoushan open channel and the pilot zone for the private sector’s participation in the BRI. Third, enterprises are moving faster into the international market. Zhejiang enterprises urgently need to carry out overseas investment, strengthen cooperation with multinational companies and allocate resources around the world. At the same time, the overseas investment activities of Chinese enterprises have started to bring dividends. Many local multinational companies have begun to come back with technology, capital, management expertise and other resources accumulated overseas and make investment in China. Fourth, important international conferences and events such as the G20 Summit and the Asian Games create great opportunities for Zhejiang enterprises to go global. Generally, the 13th Five-Year Plan period is crucial for Zhejiang to expand its opening-up and improve international competitiveness in an all-round way. It

Regional investment analysis report 2015  105 is also important for the supply-side structural reform and the modernization of the governance system and governance capability. 6 Ningbo Known for its time-honored book collections and its port that connects the world, Ningbo is a modern international port city and an important BRI city. Entering the new era, it has made full use of the advantages of an open and portbased economy to contribute to the implementation of the BRI. (1)  Recent policies of Ningbo to promote inward and outward investment In the past years, Ningbo issued a series of policies and measures to attract investment from and encourage investment in Central and Eastern European countries (CEECs). In 2015, the Ningbo Municipal People’s Government issued Several Opinions on Strengthening Comprehensive Cooperation with Central and Eastern European Countries; in March 2016, Ningbo Municipal Commission of Commerce and Ningbo Municipal Bureau of Finance jointly issued the Ningbo Administrative Measures for Subsidy for Economic and Trade Cooperation in Central and Eastern Europe Countries. Details are as follows: 1 )  S U P P O R T I N G E N T E R P R I S E S ’ I N V E S T M E N T A N D COOPERATION IN CEECS

For Ningbo enterprises that set up industrial parks in CEECs, carry out outward investment and contract overseas projects, loans that they have obtained from banks at home and abroad for one year or more for the relevant projects shall be given an interest rate discount of no more than 50% of the actual amount of interest paid in the previous year. The upfront expenses incurred shall be subsidized at a rate not exceeding 50% of the actual amount incurred in the previous year. 2 )  S U B S I D I E S F O R I N D U S T R I A L P A R K D E V E L O P M E N T I N C E E C S

For Ningbo enterprises that set up industrial parks, logistics parks, resource development zones and commodity centers in CEECs, a lump sum subsidy shall be granted with an amount not exceeding 50% of the investment and construction expenses of the parks, with a maximum of RMB3 million. Eligibility for this subsidy shall be based on the Circular on Issuing Ningbo Measures for the Recognition of the Three Kinds of Overseas Bases (Trial) (YWJMJW [2014] No. 22). 3 )  S U P P O R T I N G E N T E R P R I S E S T O P A R T I C I P A T E I N I N V E S T M E N T AND COOPERATION AND TRADE PROMOTION ACTIVITIES

For Ningbo enterprises that participated in investment and cooperation and trade promotion activities in CEECs organized by competent departments of Ningbo

106  Development overview or higher-level authorities in 2015, subsidy can be granted to cover no more than 50% of the international travel expenses, international inter-city transportation expenses, accommodation expenses, catering expenses, public and incidental expenses, visa insurance premium and other expenses, with a cap of RMB20,000 per person and two persons for each enterprise in one activity. 4 )  S U P P O R T I N G T H E I N V E S T M E N T B Y C E E C E N T E R P R I S E S I N NINGBO

First, counties, cities and districts are encouraged to host representative offices of CEECs and a subsidy can be provided to cover no more than 50% of the expenses required to establish national-level representative offices of CEECs, with a cap of RMB500,000 for each representative office. Second, CEEC enterprises are encouraged to invest in Ningbo. For the new producer services enterprises (including R&D institutions) established in Ningbo by enterprises from CEE countries, a lump sum subsidy shall be granted according to the actual amount stated in the foreign capital verification report. Specifically, a maximum subsidy is RMB200,000 for projects involving less than US$3 million of foreign investment; a subsidy of up to RMB800,000 shall be granted for projects with an actual foreign investment of US$3 million (included) to US$15 million; a subsidy of up to US$1.5 million shall be granted for projects with an actual foreign investment of US$15 million (included) or more. Third, CEE investment projects that are in line with the industrial development plan of Ningbo will be provided with resource security in the aspects of land, water and electricity, capital, green channel of employment, and school entrance for employees’ children. 5 )  E N C O U R A G I N G C O U N T I E S / C I T I E S T O B U I L D C E E C INDUSTRIAL PARKS

Ningbo supports the construction of CEEC industrial parks. The Ningbo Municipal Bureau of Finance earmarks RMB5 million per year to accelerate the ­construction of the CEEC logistics park in Ningbo Bonded Area and the CEEC featured industrial parks in Cixi, a county-level city under Ningbo, and to encourage all counties, cities and districts and development areas in Ningbo to formulate supporting policies for the foreign investment projects of CEECs. The CEEC industrial parks in the city that are clearly supported by the relevant documents of the municipal government shall be provided with a subsidy of no more than RMB1 million per year for the construction of the parks and foreign investment attraction. 6 )  I N C R E A S I N G F I N A N C I A L S U P P O R T F O R C O O P E R A T I O N I N C E E C S

Ningbo supports local enterprises to provide funds for their subsidiaries and affiliated companies in CEECs through overseas loans. Where a Ningbo enterprise invests in a CEEC, the upfront expenses, if less than US$3 million, can be directly provided by bank loans, or, if more than US$3 million, shall be filed

Regional investment analysis report 2015  107 with the State Administration of Foreign Exchange before seeking loans from a bank. Ningbo carries out the pilot reform of overseas M&A foreign exchange management; Ningbo enterprises that make overseas investment through M&A in CEECs need only to get a foreign exchange registration certificate before the transfer of funds for the M&A, while all other procedures can wait until later. Ningbo has the only cross-border loan pilot project in China, and encourages its banks to directly lend to institutions or individuals in CEECs. Investors from CEECs can settle foreign exchange for their capital in accordance with their actual business needs without restriction. Ningbo supports cooperation with financial institutions of CEECs to develop cross-border RMB direct investment business, offer letters of guarantee in RMB, and grant RMB loans for overseas projects. It supports the expansion of cross-border RMB cash pooling. 7 )  S I N O S U R E N I N G B O B R A N C H S U P P O R T I N G N I N G B O ENTERPRISES TO GO GLOBAL

First, there is a simple service package for overseas investment. Ningbo enterprises may join a Sinosure investment insurance scheme to cover losses caused by political risks in their overseas investment activities and, in the meantime, Sinosure provides services such as risk assessment, risk warning, project tutoring, and country-specific consultation. These help reduce the uncertainties of the investment environment in an all-round way. This approach applies to projects with a contract value (or insured value) of less than US$10 million, as long as they do not involve sensitive industries specified in relevant national documents. There is also the medium- and long-term small insurance model. Specially designed for the going-global of Ningbo enterprises, it grants credit lines to buyers to cover large numbers of medium- and long-term overseas investment projects. The key point is to base risk evaluation on buyers through comprehensive analysis of factors such as the financial strength and experience of buyers and the countries involved, thus streamlining procedures required and reducing the insurance burden for enterprises. It provides more pertinent risk analysis and consulting and evaluation services for enterprises, but does not weaken the risk control of the insurance scheme itself. The medium- and longterm small insurance model requires no letter of intent, greatly shortening the time required from two or three months to one month and allowing enterprises to proceed with their projects faster and with better protection. (2)  Inward and outward investment of Ningbo in 2015 1 )  G R O W T H O F I N W A R D A N D O U T W A R D I N V E S T M E N T

In terms foreign investment, in 2015, Ningbo approved 444 new foreign investment projects, a decrease of 5.1% year-on-year; utilized US$11.926 billion of foreign capital, down 11.7% year-on-year. The contractual foreign investment totaled US$7.654 billion and the amount actually utilized was US$4.234 billion,

108  Development overview an increase of 9.0% and 5.2% year-on-year respectively. Up to 18 new projects involved over US$100 million of new foreign investment (including capital increment), and the corresponding contractual foreign investment was US$1.703 billion, a year-on-year increase of 13.7%. Ningbo approved two new projects from Fortune Global 500 enterprises: Chevron Corporation invested US$160 million in a lubricant additive project (Phase I), making Ningbo its fifth lubricant additive manufacturing center in the world; China Resources of the Hong Kong SAR invested to establish Xiangshan China Resources Natural Gas Co., Ltd. for pipeline gas and bottled gas businesses in Xiangshan, and the total foreign investment was US$27.78 million. In terms of outward investment, in 2015, Ningbo approved 226 new overseas Chinese enterprises and institutions, an increase of 13.0% year-on-year with a total outward investment from the Chinese side amounting to US$2.511 billion, while the actual outward investment was US$1.277 billion, a year-on-year increase of 36.6% and 49.5% respectively. Up to 46 outward investment projects were over US$10 million in value, and the total investment involved was US$1.96 billion, accounting for 78.1% of the total. The turnover of overseas project contracting and labor cooperation of Ningbo enterprises reached US$1.907 billion; the total value of new contracts amounted to US$1.41 billion, including 12 projects above US$10 million in value; and the total contractual outward investment was US$700 million, accounting for 49.8% of the total value of new contracts signed by Ningbo enterprises. There were a total of 25 cross-border M&A projects, five more than the previous year, and the total value was US$250 million, an increase of 27.3% year-on-year. Ningbo Shuanglin Auto Parts Co., Ltd. paid US$100 million to acquire Australia’s DSI Holdings, the largest M&A project of Ningbo in 2015. 2 )  S T R U C T U R E O F I N W A R D A N D O U T W A R D I N V E S T M E N T

i)  Foreign investment. The secondary industry utilized more than half of foreign investment in Ningbo while the share of the tertiary industry declined. In 2015, the actual utilization of foreign capital in the secondary industry in Ningbo was US$2.283 billion, an increase of 21.5% year-on-year, accounting for 53.9% of the total, up 7.2 percentage points over 2014. Specifically, the contractual foreign investment in the actual utilization of the oil refining, petroleum coking, and nuclear fuel processing industry reached US$300 million and US$333 million respectively, 2.6 and 7.7 times that of 2014 respectively. The contractual foreign investment and the actual utilization of foreign capital in the transportation equipment manufacturing industry reached US$1.357 million and US$884 million respectively, 4.8 and 12.3 times that of 2014 respectively. The Phase I and expansion project of Shanghai Volkswagen Ningbo Branch in the Hangzhou Bay Economic and Technological Development Zone, with a contractual foreign ­ investment and the actual utilization of foreign capital of US$800 million, was the largest foreign investment project of Ningbo in recent years. The tertiary industry utilized US$1.937 billion of foreign capital, a decrease of 9.6% year-on-year. ­Specifically, the use of foreign capital in real estate, wholesale and retail sales

Regional investment analysis report 2015  109 industries decreased by 9.9% and 49.5% respectively year-on-year while that in scientific research, technical services and geological surveying, information transmission, software and computer services industries doubled, and the actual utilization of foreign capital in the two industries were 4.8 times and 3.5 times that of 2014 respectively. In the tertiary industry, the Jiuqintang elderly care project in Ninghai County was the first foreign-invested elderly care project; the first Taiwanfunded bank—Mega International Commercial Bank—settled in the Ningbo Eastern New Town in Jiangdong District, with a contractual foreign investment of US$160 million. The actual utilization of foreign capital in the primary industry was US$13.88 million, an increase of 3.5 times over 2014. From a regional perspective, investment projects from the Hong Kong SAR decreased significantly, while European investment in Ningbo greatly increased. In 2015, Ningbo’s actual utilization of foreign capital from the Hong Kong SAR was US$2.196 billion, a decrease of 21.3% year-on-year, accounting for 51.9% of the city’s total, down by 17.4 percentage points over 2014. Investment from Europe increased sharply to US$913 million, 7.6 times that of 2014, including US$63.34 million from the UK and US$801 million from Germany, up 17-fold and 31-fold respectively. Investment also came from Denmark, Italy and Switzerland. The actual utilization of foreign capital from the United States was US$38.57 million, roughly the same as in 2014. ii)  Outward investment. From a regional perspective, Ningbo enterprises moved further into traditional markets and continued to explore emerging markets. In 2015, Asia was still the main destination for Ningbo enterprises, with a total investment of US$1.53 billion from the Chinese side and a turnover of US$850 million for overseas contracted projects, accounting for 61.0% and 44.5% of the city’s total, and representing an increase of 10.9% and 25% over the previous year respectively. In 2015, Ningbo enterprises invested in four new destination countries and regions, i.e., Finland, Kenya, Madagascar and Anguilla. From the perspective of industries, the overseas investment in the tertiary industry increased rapidly and the structure of overseas contracted projects improved. In 2015, the outward investment in the tertiary industry, mainly the wholesale and retail sales industry and the cultural industry, grew rapidly, totaling US$1.73 billion, accounting for 68.9% of the city’s total, an increase of 57.3% year-on-year. Specifically, the construction industry made US$160 million of overseas investment, 10 times the amount in 2014, greatly diversifying overseas contracted projects. The number of overseas contracted projects in the construction industry, including housing, power facilities, and manufacturing and processing facilities, increased greatly, with turnover of US$510 million, US$430 million and US$310 million respectively, up 26.9%, 22.6% and 16.3% year-on-year respectively. 3 )  P R O B L E M S O F I N W A R D A N D O U T W A R D I N V E S T M E N T

In regard to enterprises, for one thing, Ningbo enterprises making overseas investment generally do not have clear strategies for overseas development and

110  Development overview remain in the primary stage of going-global. In particular, most of the private enterprises, the main force of the going-global campaign, lack clear strategic planning and modern management systems. Some enterprises simply seek to avoid the fierce competition at home and they are not likely to succeed abroad. Some enterprises that want to master core industrial technologies through overseas M&A but fail to integrate, reorganize and manage the enterprise well after the M&A and face difficulty in utilizing advanced elements, for lack of experience in interacting with the outside world. Many enterprises are confronted with great investment risk when making cross-industrial investment overseas. Second, there is a lack of leading enterprises. As the main players in the going-global campaign of Ningbo, private enterprises lack economic strength, funds, technology and management expertise to invest in large projects that can drive more enterprises abroad along the line. In addition, private enterprises in Ningbo are mostly used to working alone like they usually do in China and lack the ability to cooperate for overseas projects. That is why they cannot thrive overseas. Third, the enterprises lack risk awareness. Most Ningbo enterprises who go global lack awareness of risks and insurance for overseas investment and their insurance coverage is usually insufficient. In the implementation of overseas projects, enterprises lack contact with the Chinese embassies and consulates in the host countries, which makes it difficult for the enterprises to seek protection and safety guidance. At the same time, a few enterprises might adopt non-standard ways of operation to a certain extent in overseas business operation, pushing up investment risks. Fourth, there is a shortage of international professionals. Relevant enterprises are seriously short of professionals for overseas investment and follow-up project management. Currently, there is a shortage of interdisciplinary talents who possess extensive expertise and service capability and can communicate in different languages while having a good understanding of the political, economic and cultural conditions of host countries. The lack of high-level talent affects the quality of overseas investment efforts and the operation efficiency of relevant enterprises and projects. As a macro-environment builder and comprehensive information provider for enterprises to invest overseas, the government must further improve its services. First, it has failed to follow up on the progress of overseas investment projects and overall assessment of national macro-investment environment in the face of a changing world landscape and various specific risks. In particular, the investment risk early warning mechanism for developing countries in Asia, Africa and Latin America has not been established and there are no designated institutions or departments to provide comprehensive, systematic and effective information services for enterprises to invest overseas. Second, private enterprises in Ningbo are generally small in scale and weak in strength and anti-risk ability, with limited contact with foreign embassies, consulates and chambers of commerce, and all these have made it difficult for enterprises to obtain necessary investment security assistance when getting involved in investment disputes in host countries. Third, the policy support for foreign investment attraction is insufficient and the supporting infrastructure in some industrial parks is not as good as required, making it hard to attract overseas enterprises.

Regional investment analysis report 2015  111 From the perspective of financial support, a large part of the overseas investment of Ningbo enterprises has been made by private enterprises with mainly their own capital. The financing struggle has been the most common and outstanding problem reported by enterprises and the biggest obstacle for them to go global. First, policy-based financial support is inadequate and its scope is limited. The Export-Import Bank of China developed going-global services, but the scale of overseas investment and financing products it provides are relatively small and mainly for large state-owned enterprises (SOEs) and strategic industries such as energy and resources, making it difficult for private enterprises to obtain credit support. Second, the capacity of overseas branches of Chinese banks is insufficient and the global credit system is not good enough. Chinese banks have few branches overseas and those in existence are mostly small in scale and slow in growth. They thus currently do not have the capacity to provide strong financial support for overseas Chinese enterprises. Moreover, Chinese banks have set up overseas branches mainly in developed countries and regions while Ningbo enterprises mainly invest in emerging markets. Third, it has been difficult for enterprises to get access to overseas financing. The enterprises that make outward investment are often taken as new companies overseas with limited credit standing and a high lending threshold. Fourth, there is only a small number of equity investment institutions that support overseas investment and the threshold is high with few to qualify for loans. Thus, such services cannot meet the wide-ranging financial needs of small and medium-sized private enterprises who need only small loans. Fifth, the credit insurance system needs to be improved. At present, China Export & Credit Insurance Corporation (Ningbo Branch) is the only insurance company that provides insurance for overseas investment projects in Ningbo. However, as it focuses on projects in line with national policies and strategies and covers mainly political risks, it cannot meet the actual needs of overseas investment by private enterprises in Ningbo. In regard to intermediaries, Ningbo is weak in professional intermediary services such as investment banking, finance, and legal and management consulting. Relevant institutions lack experience in and the capability to do overseas investigation, legal review, and asset and risk assessment, failing to meet the needs for consulting services of enterprises and government agencies. 4 )  P R O S P E C T S F O R 2016

Worldwide, the global economy has been stagnant after the international financial crisis and a large amount of floating capital is seeking new investment opportunities. China is an attractive destination for foreign investment given its huge market and stable development environment. At the same time, the international financial crisis has devalued the assets of a large number of industries and enterprises in major developed countries in Europe and America and this creates new space for Chinese enterprises to go global. In addition, many developing countries are in need of Chinese investment to advance their development.

112  Development overview These factors combined greatly contribute to the rapid development of China’s inward and outward investment in an all-round way. At home, as China’s economy enters the new normal, with mounting downward pressure and sluggish external demand, China has implemented a series of strategies for innovation-driven development and seized the opportunity of the new scientific and technological revolution to promote industry 4.0, develop its manufacturing industry and emerging service sector, improve domestic macrocontrol and streamline administration and delegate more powers to provide a more relaxed, convenient and fairer market environment for foreign investment. At the same time, various going-global policies have been rolled out to actively encourage international capacity and equipment manufacturing cooperation and to provide a more active and convenient policy environment and financial services for Chinese enterprises to invest overseas. Known as “a city of culture and a gateway to the world,” Ningbo is a modern international port city that enjoys the advantages of active private capital and outstanding resource pooling capability of private enterprises. Entering the new era, Ningbo aims to build itself into “a port economic circle, manufacturing innovation center, economic and trade cooperation center and port and shipping logistics service center” with greater international influence as was stated in its strategic planning for the 13th Five-Year Plan period and its medium- and longterm development, with the launch of a series of policies and measures to promote inward and outward investment. Meanwhile, Ningbo hosted two China–Central and Eastern European Countries (CEEC) Expos successively and has been recognized as one of the first pilot cities for Made in China 2025. As the spillover effect of these grows, the inward and outward investment in Ningbo is expected to maintain a good momentum over the long term. In 2016, Ningbo will see larger scale and higher quality in its inward and outward investment. (3)  Investment in and from BRI countries in 2015 1 )  I N V E S T M E N T O F B R I C O U N T R I E S I N N I N G B O

In 2015, 18 BRI countries invested in a total of 61 projects in Ningbo, an increase of 5.2% year-on-year. The contractual foreign investment reached US$601 million, down 26.9% year-on-year, accounting for 7.9% of the city’s total foreign investment; the actual utilization of foreign capital was US$310 million, an increase of 6.1% year-on-year, accounting for 7.3% of the city’s total. Southeast Asia was the largest source of foreign capital for Ningbo, with a total contractual investment of US$400 million. Singapore was the largest ­contributor with a total contractual investment of US$300 million. Following Southeast Asia are South Asia, Central and Eastern Europe, West Asia and North Africa, and Central Asia (see Figure 2.7). Foreign investment concentrated in the tertiary industry, mainly commerce, housing, education, and health.

Regional investment analysis report 2015  113

Figure 2.7  Investment of BRI countries in Ningbo in 2015, by region. 2 )  N I N G B O ’ S I N V E S T M E N T I N B R I C O U N T R I E S

In 2015, Ningbo made great efforts to seize the strategic opportunity of the BRI and saw remarkable progress in its move into BRI countries. A total of 49 overseas enterprises and institutions were set up in 18 BRI countries, an increase of 81.5% year-on-year, with an approved outward investment of US$360 million, an increase of 12.5% year-on-year, accounting for 14.3% of the city’s total overseas investment. The turnover of overseas contracted projects completed in 21 BRI countries was US$910 million, an increase of 29.9% year-on-year. By region, Southeast Asia was the most favored destination of Ningbo enterprises. In 2015, a total of 30 overseas enterprises and institutions were set up in Southeast Asia, accounting for 62% of those in BRI countries, with an approved investment of US$250 million from the Chinese side, accounting for 71% of the total. With the spillover effect of the first China–Central and Eastern European Countries (CEEC) Expo, the investment cooperation between Ningbo and CEECs became closer, with a total of US$10.44 million of investment made in Romania and Hungary, up 28.5 times. Ningbo’s investment in Central Asia also increased substantially. Five new overseas enterprises and institutions were set up there in 2015, with an approved outward investment of US$67.1 million from the Chinese side (see Figure 2.8).

Figure 2.8  Ningbo’s investment in BRI countries in 2015, by region.

114  Development overview Table 2.4  Ningbo’s major investment projects in BRI countries in 2015 No. Enterprise

Destination Project of investment

Investment

1

Ningbo Broad Telecommunication Co., Ltd.

Vietnam

USB cable manufacturing project

US$10 million

2

Bros Eastern Co., Ltd.

Vietnam

US$52 million

3

Ningbo Yongfeng Packing Utensils Limited Company Ningbo Haitian Huayuan Machinery Co., Ltd.

Vietnam

5

Zhejiang Juxin Joint Group Co., Ltd.

Mongolia

6

Limited International Cooperation in Ningbo, Chinaliability company Ningbo Changlong Import & Export Co., Ltd Ningbo Changlong Import & Export Co., Ltd Ningbo Jiangfeng Electronic Materials Co., Ltd.

Thailand

Color spinning production line expansion and supporting dyeing facility project Plastic packaging product production project Injection molding machine production project Establishment of a company and the “sunshine” project Phase III Daily paper products production project

US$1 million

Dongfang Risheng New Energy Co., Ltd

Romania

Knitted clothing project Knitted clothing project Sales platform for sputtering targets products 20MW solar power project

4

7 8 9 10

Vietnam

Cambodia Cambodia Singapore

US$8.66 million US$3.98 million US$9.90 million US$0.48 million

US$1 million US$1 million US$34.98 million

In terms of industries, the manufacturing industry remained the largest recipient of investment from Ningbo in BRI countries. In 2015, there were 10 major outward investment projects of Ningbo in BRI countries, including the color spinning production line expansion and supporting dyeing facility project of Bros Eastern Co., Ltd. and the 20MW solar power project of Risen Energy Co., Ltd. (see Table 2.4). 3 )  P R O S P E C T S F O R 2016

In 2016, with the BRI further implemented, the investment in and from BRI countries entered a new stage with a strong momentum in Ningbo, opening up new space for development. From January to June, Ningbo enterprises made direct investment in 15 BRI countries, with the approved investment from the Chinese side amounting

Regional investment analysis report 2015  115 to US$570 million, mainly in Singapore, Poland and Romania, up by 137.5% yearon-year. In the same period, Ningbo enterprises signed contracts for new overseas projects with a total value of US$500 million in BRI countries, an increase of 39.2% year-on-year. In terms of foreign investment, from January to June, BRI countries invested in 40 projects in Ningbo, up by 66.7% year-on-year, with a contractual foreign investment of US$250 million, an increase of 5.8% year-on-year, both significantly higher than the growth in the same period in 2015. However, Ningbo should also be soberly aware that many problems remain in the inward and outward investment of Ningbo: The city’s overall scale of investment in BRI countries is not large and still lacks large leading enterprises for its going-global efforts. Financial and taxation support needs to be strengthened and the information should be better provided in terms of the national conditions, policies and laws of target countries. Ningbo still faces a shortage of international interdisciplinary talents who are familiar with the cultures, languages and other aspects of destination countries of investment and trade. Going forward, Ningbo will focus on the BRI and follow the principle of equal consultation, mutual benefits and win-win cooperation, striving to achieve new breakthroughs in inward and outward investment. First, Ningbo will enlarge the scale and improve the quality of foreign investment. As a pilot city of Made in China 2025, Ningbo will focus on introducing enterprises in high-tech industries such as advanced equipment, new materials, new-generation information technology, etc. It will relax access control over the services market, push up the proportion of foreign investment in modern services and attract international financial institutions to set up branches in Ningbo. Meanwhile, the city will develop new forms of foreign capital utilization and overseas investment such as cross-border M&A, fund investment, securities investment and venture capital. Second, Ningbo will foster local multinational companies. It supports largescale local conglomerates, industrial leaders and high-tech enterprises to carry out internationalization strategies, and develop into international enterprises with great driving force and good comprehensive benefits through direct investment, acquisition and equity participation. Ningbo will speed up the establishment of China Ningbo International Investment Cooperation Co., Ltd. (CNIC) so that it can lead the city’s enterprises to carry out overseas investment, cross-border M&A, international capacity and equipment manufacturing cooperation and overseas project contracting. Third, Ningbo will build high-level opening-up platforms. It will advance the building of country-specific industrial parks such as the Sino–CEEC (Ningbo) Industrial Park and Sino–Czech (Ningbo) Industrial Cooperation Park, forming a number of international industrial cooperation platforms focused on featured industries and major functions. Ningbo will strengthen the construction of its overseas parks and support local enterprises to go global in clusters and deepen cooperation along industry chains with peers in host countries. Fourth, Ningbo will improve its inward and outward investment service system. It will establish an information service management platform for the

116  Development overview a­ll-round cooperation of government, banks and credit institutions and the timely release of public information and policy support such as country-specific investment and cooperation guides, investment industry guides, and analyses of investment barriers or risks. 7 Fujian (1)  Recent policies of Fujian to promote inward and outward investment 1 )  F U R T H E R I M P R O V E M E N T O F O V E R S E A S I N V E S T M E N T

In April 2014, Fujian Provincial People’s Government issued Several Opinions on Further Promoting Overseas Investment (MZ [2014] No. 113). It proposed six measures for investment promotion: simplifying procedures for overseas investment, simplifying exit examinations, providing more convenient customs clearance measures, improving foreign exchange management for overseas investment, increasing financial services, and enhancing fiscal and taxation support. 2 )  I N N O V A T I O N I N I N V E S T M E N T A T T R A C T I O N M E C H A N I S M S FOR NATIONAL AND PROVINCIAL DEVELOPMENT ZONES AND INDUSTRIAL PARKS

The Circular on the Eight Measures for Innovation in and Promotion of National and Provincial Development Zones and Industrial Parks (MZB [2015] No. 125) issued by the General Office of Fujian Provincial People’s Government in September 2015 called for strengthening investment promotion through multiple means, and clearly stated that for a new foreign investment project that conforms to the industrial development orientation of the development zones and invests more than RMB500 million in fixed assets (or more than RMB300 million for projects in key counties for poverty alleviation and the former Central Soviet Area), the Fujian Provincial Department of Finance shall provide a subsidy to cover the costs of pre-stage work up to 1/2000 of the fixed assets investment of the project or RMB5 million from 2016. A subsidy of 1–3% of the actual registered capital shall be granted to new projects from Fortune Global 500 enterprises, paid annually by the provincial public finance authorities with the value-added tax, business tax and corporate income tax collected at the provincial level through the county, city or district where the relevant enterprise is located. 3 )  M O R E E F F O R T S F O R I N V E S T M E N T P R O M O T I O N

In November 2015, authorized by the Fujian Provincial People’s Government, Fujian Development and Reform Commission, the Foreign Affairs Office of the People’s Government of Fujian Province and the Department of Commerce of Fujian jointly issued Fujian’s Construction Plan for the Core Area of the 21st

Regional investment analysis report 2015  117 Century Maritime Silk Road, proposing that the investment promotion mechanism should be improved to advance inward and outward investment and cooperation and foreign investment should be used in leading industries, high-tech industries, modern services industries, energy conservation and environmental protection. With the Asia Cooperation Dialogue Forum on Belt and Road Cooperation and Asia Business Conference and the China (Quanzhou) Maritime Silk Road International Brand Exposition, and relying on exhibitions such as the China International Fair for Investment and Trade and the Cross-Straits Fair for Economy and Trade and the China Strait Project Achievement Fair, activities themed on the 21st Century Maritime Silk Road (MSR) should be organized to attract more merchants from the MSR countries and regions to expand their economic and trade investment and cooperation. Various types of parks should be encouraged to carry out specialized investment attraction activities and foreign investment projects in line with industrial policy orientation should be guided to the parks. Fujian Province supports local enterprises to seek public offering and financing in MSR countries and regions. Enterprises are encouraged to invest in production bases of ­competitive products of the light industry, textiles, clothing, household appliances, machinery, ships and IT overseas, and eligible enterprises should be guided and supported to build economic and trade cooperation zones overseas. 4 )  P R O M O T I N G T H E I N N O V A T I O N - D R I V E N D E V E L O P M E N T O F PROCESSING TRADE

In June 2016, Fujian Province’s Implementation Plan for Promoting the InnovationDriven Development of Processing Trade (MZB [2016] No. 93), issued by the General Office of Fujian Provincial People’s Government, proposed to step up the efforts for investment attraction and promote the integrated development of various industries. In accordance with Several Opinions of Fujian Provincial People’s Government on Encouraging Foreign Investment (MZ [2012] No. 35) and the Circular of Fujian Provincial People’s Government on the Ten Measures to Accelerate the Introduction of Global Top 500 Enterprises (MZW [2012] No. 356), Fujian should make good use of the policies and measures applicable to China (Fujian) Pilot Free Trade Zone, Pingtan Comprehensive Experimental Area and Fuzhou New Area. For projects with a total investment of over US$500 million in Fuzhou, Zhangzhou, Quanzhou, Putian and Pingtan Comprehensive Experimental Area, and projects with a total investment of more than US$100 million in Sanming, Nanping and Longyan, an investment attraction fund of no more than RMB1 million shall be granted. Foreign-funded enterprises, especially subsidiaries of multinational corporations, are encouraged to set up procurement centers, distribution centers and settlement centers in Fujian, develop headquarters economy and accelerate the integrated development of manufacturing and services. Processing trade enterprises are encouraged to go global and carry out international capacity cooperation. Fujian guides and supports eligible and leading processing trade enterprises to establish overseas industrial cooperation zones in MSR countries and regions. It also supports

118  Development overview leading enterprises and associations in processing trade to organize outward investment initiatives based on industrial clusters, and provides financial support for the going-global efforts of processing trade enterprises that meet the requirements laid out in the Administrative Measures for the Special Funds for Overseas Economic and Trade Cooperation of Fujian Province (MCW [2015] No. 30) and the Interim Administrative Measures for the Use of Investment Promotion Funds in Fujian Province (MSWCW [2014] No. 42). (2)  Inward and outward investment of Fujian in 2015 and prospects for 2016 1 )  G R O W T H O F I N W A R D A N D O U T W A R D I N V E S T M E N T

In 2015, up to 1,689 new foreign investment projects were approved in Fujian, with a total contractual foreign investment of US$14.46 billion, an increase of 70.3% and the highest in 22 years. The actually utilized foreign capital registered US$7.68 billion, an increase of 8%, 2.4 percentage points higher than the national average. A total of 276 overseas investment projects were filed, with a total outward investment of US$4.68 billion, an increase of 68.9%. 2 )  S T R U C T U R E O F I N W A R D A N D O U T W A R D I N V E S T M E N T

i)  Utilization of foreign capital. The actual utilization of foreign capital in the service sector grew rapidly and that in the manufacturing sector picked up slightly. First, the service sector actually utilized US$3.24 billion of foreign capital, an increase of 28.5% year-on-year. The fastest growth was seen in information transmission, computer services and software (up 2.2 times to US$280 million), wholesale and retail sales (up 1.6 times to US$910 million), financial services (up 96.6% to US$470 million), and leasing and business services (up 80.4% to US$420 million). Second, the actual utilization of foreign capital in the manufacturing industry reached US$4.15 billion, up 5.8%, 0.3 percentage points higher than that from January to November. Specifically, the actual utilization of foreign capital in the mechanical equipment industry, the oil and chemical industry, the electronics and information industry reached US$710 million, US$480 million and US$330 million respectively, up 23.4%, 43.3% and 3.5% respectively. Third, agriculture, forestry, animal husbandry and fishery actually utilized US$170 million of foreign capital, an increase of 44.1%. Actual foreign investment from major sources of foreign capital increased generally. Actual investment from the EU, the United States, Japan, the Hong Kong SAR and Taiwan of China reached US$280 million, US$71.17 million, US$120 million, US$4.7 billion and US$1.31 billion (including transfers via a third place) respectively, up eight times, 89.4%, 83.9%, 4.1% and 10.3% respectively. The contractual foreign investment in large-scale projects grew rapidly. A total of 53 new foreign investment projects involved more than US$10 million of investment, making a total contractual foreign investment of US$7.16 billion, an increase of 1.3 times.

Regional investment analysis report 2015  119 ii) Outward investment. Fujian’s investment in BRI countries showed strong momentum. Fujian enterprises invested in a total of 48 projects in BRI countries such as Indonesia, Cambodia, Malaysia, the Philippines, Singapore, Vietnam and Laos, with a total agreed outward investment of US$1.38 billion mainly in the ocean fishing, aquatic products processing, mineral resource development, and float glass production, an increase of 2.7 times year-on-year. Specifically, Fujian enterprises invested 11 projects in Indonesia, with a contractual investment of US$700 million, accounting for 15% of the province’s total, the largest share among all BRI countries. Investment for international capacity cooperation grew rapidly. A total of 72 projects were filed, involving US$2.27 billion of investment from the Chinese side, twice that of 2014. These include 37 cooperation projects in the manufacturing industry, with a contractual investment of US$700 million, 22 cooperation projects in agriculture, forestry, animal husbandry and fishery, with a contractual investment of US$650 million, and 13 mining projects, with a contractual investment of US$910 million. The largest share of Fujian’s outward investment flowed into Asian countries. In 2015, Fujian’s OFDI flows to Asia totaled US$1.847 billion, up 1.5 times year-on-year increase, accounting for 67.0% of the total. Other major destinations of OFDI flows include North America (up 1.9 times year-on-year to US$507 million, accounting for 18.4% of the total), Latin America (up 1.7 times year-on-year to US$210 million, accounting for 7.6% of the total), Africa (up 3.1 times to US$110 million, accounting for 4.0% of the total), Europe (up 4.9 times to US$56 million, accounting for 2.0% of the total) and Oceania (up 1.5 times to US$27 million, accounting for 1.0% of the total). More than 90% of Fujian’s outward investment went to leasing, business services and three other business sectors. In 2015, the leasing and business services industry received US$1.043 billion of OFDI from Fujian, an increase of 1.2 times year-on-year, accounting for 37.8% of the total; the manufacturing industry received US$652 million, registering a year-on-year growth of 3.4 times, accounting for 23.6% of the total; the wholesale and retail sales industry received US$583 million, a three-fold increase from a year earlier, accounting for 21.1% of the total; the transportation, warehousing and postal services industry received US$134 million, up 1.4 times year-on-year, accounting for 4.9% of the total; and the mining industry received US$87 million, a year-on-year increase of 4.8 times, accounting for 3.2% of the total. These five sectors together received 90.6% of the total outward investment of Fujian, while other sectors received US$258 million, up 76.7%, accounting for 9.4% of the total. 3 )  P R O S P E C T S F O R 2016

i)  Improving foreign capital utilization. First, Fujian Province will strengthen follow-up work and do more to push projects forward. It will continue with the “four point” working mechanism (one project, one leader, one working group,

120  Development overview and one work plan) and the investment promotion mechanism at provincial, municipal and county levels, improve the inter-departmental joint meeting system, and strengthen follow-up to push major foreign investment projects forward and expedite transformation and upgrading. Second, Fujian will make good use of the preferential policies applicable to the China (Fujian) Pilot Free Trade Zone and step up publicity and investment promotion. It will continue to track multinational companies and their headquarters in China and adopt flexible and diverse methods to attract investment from them, especially the Fortune Global 500 enterprises, the 100 largest enterprises in Taiwan, China, and industrial leaders from around the world. Third, Fujian will study and issue new policies for the utilization of foreign capital, especially policies that encourage international industrial capital and venture capital to participate in the M&A and reorganization of Fujian enterprises and strive to create a more comparatively advantageous policy environment. Fourth, Fujian will innovate in project planning, strengthen cooperation with industrial authorities and trade associations, and organize foreign investment projects by categories while attracting industry-chain investment and investment from Fortune Global 500 enterprises and the 100 largest enterprises in Taiwan, China. Fifth, Fujian will promote the upgrading of and innovation in development zones. It will advance the land management reform in development zones and guide investment projects from Fortune Global 500 enterprises and other major projects into these zones. It welcomes partners for joint construction and development of these zones. The province will promote the integration and upgrading of special customs supervision areas, guide the circular and sustainable development and enhance the core competitiveness of development zones. Fujian will strengthen targeted guidance, explore and establish the withdrawal mechanism and improve the comprehensive assessment and evaluation system of development zones. ii)  Promoting the sustainable and healthy development of the going-global campaign. First, Fujian will provide better follow-up services for overseas economic and trade parks. It will keep track of proposed industrial parks and parks under construction, report eligible parks to higher-level authorities for recognition as overseas economic and trade cooperation parks, actively disseminate policies that apply to overseas economic and trade parks, guide leading enterprises and eligible enterprises such as Zijin Mining to develop into industrial parks and actively help parks attract investment. Second, Fujian encourages international capacity cooperation. In accordance with the Guiding Opinions on Promoting International Production Capacity and Equipment Manufacturing Cooperation issued by the State Council, based on its situation of surplus capacity, Fujian will guide leading enterprises and trade associations to organize industrial ­cluster-based outward investment. Third, starting with overseas project contracting, Fujian will advance the exports of building materials and equipment through outward investment and cooperation platforms. Fourth, Fujian will take foreign aid training programs as opportunities to promote economic and trade exchanges

Regional investment analysis report 2015  121 with other countries. Fifth, Fujian will improve the service facilitation system. Focusing on overseas economic and trade cooperation zones, international capacity cooperation and foreign aid training programs, it will revise and improve policies concerning the special funds for outward investment and cooperation and support enterprises to invest in BRI countries. (3)  Investment in and from BRI countries in 2015 and prospects for 2016 1 )  I N V E S T M E N T O F B R I C O U N T R I E S I N F U J I A N

In 2015, Fujian welcomed 103 investment projects from BRI countries, with a total contractual foreign investment of US$430 million, up 67.8% year-on-year. The actual foreign investment reached US$410 million, down by 34.5% year-on-year. 2 )  F U J I A N ’ S I N V E S T M E N T I N B R I C O U N T R I E S

In 2015, Fujian enterprises invested in 48 projects in BRI countries, with a contractual investment of US$1.38 billion, an increase of 2.7 times over the previous year, three times the average of the province. 3 )  P R O S P E C T F O R I N V E S T M E N T I N A N D F R O M B R I C O U N T R I E S I N 2016

In 2016, Fujian will focus on the BRI and the Major Tasks of 2016 Fujian Province Construction Plan for the Core Area of the 21st Century Maritime Silk Road, coordinates between inward and outward investment, make full use of platforms such as the China (Fujian) Pilot Free Trade Zone, overseas economic and trade cooperation zones, foreign aid training programs and trade fairs to gather human, goods, capital and information resource of MSR countries and gradually build itself into a bridgehead for expanding the economic and trade cooperation with these countries. The main measures are as follows: i) Promoting international capacity cooperation. In accordance with the Guiding Opinions on Promoting International Production Capacity and Equipment Manufacturing Cooperation issued by the State Council, based on its ­situation of surplus capacity, Fujian will draw up plans for key countries and industries, issue the Guiding Opinions on Overseas Investment and Cooperation for the Core Area of the 21st Century Maritime Silk Road to guide leading enterprises and trade associations to organize industrial cluster-based outward investment. The province will promote the internationalization of enterprises and industries by making good use of the preferential policies and measures for the China (Fujian) Pilot Free Trade Zone in terms of enterprise incorporation, overseas investment, foreign exchange, customs clearance, inspection and quarantine.

122  Development overview It will actively guide overseas investment projects with park-oriented development potential to realize park-oriented development and make overseas economic and trade cooperation zones the main carriers of international capacity cooperation for the province. ii)  Seeking new trade growth. First, Fujian will continue to hold the promotion events targeted at 21st Century Maritime Silk Road for Fujian brands. Fujian enterprises are encouraged to set up marketing centers, operation centers and comprehensive service facilities in MSR countries, organize trade fairs and expos to actively market Fujian’s commodities and expand the scale of trade. Second, starting with overseas project contracting, Fujian will promote the development of overseas contracting projects and labor services by enlarging its overseas contracting teams, improving the quality of the engineering labor force and innovating relevant methods, so as to promote the export from building materials, equipment and machinery enterprises. Third, efforts will be made to expand the import of resource-based commodities and products in short supply for production, living and construction. Fujian will accelerate the building of the “single window” clearance mechanism to create a new model of port customs clearance and a better import environment. iii)  Giving play to the role of foreign aid training programs. Fujian will strive to increase the number of foreign aid training programs assigned to its relevant training institutions by national ministries and commissions such as the Ministry of Commerce and the International Department of the Central Committee of the Communist Party of China. It will analyze the basic situation and investment and trade needs of the countries and regions where the trainees come from, enhance exchanges with participants from BRI countries and regions and organize matchmaking events with officials and technicians from BRI countries and relevant enterprises in Fujian, so as to promote international trade and inward and outward investment. iv)  Improving the service promotion system. Subsidies will be granted at certain proportions to overseas investment enterprise to cover loan interest, investment insurance premium, resource reshipment insurance premium, intermediary service fees, and other costs of international project contracting and labor cooperation projects. Fujian will actively develop more channels for the cooperation with financial institutions and national funds and broaden financing channels for “going global” enterprises and projects. The province will give full play to the role of professional intermediary agencies to provide enterprises with services on information, laws, finance, intellectual property right protection and certification. The working contact mechanism between the commerce departments of Chinese embassies and the Chinese chambers and associations of commerce, so as to provide information services to Fujian enterprises operating abroad in a timely manner. Fujian will guide enterprises to establish and improve overseas risk early warning, prevention and response mechanisms to

Regional investment analysis report 2015  123 ensure the safety of on-site personnel and assets security while strictly abiding by the laws and fulfilling the social responsibilities in host countries. 8 Xiamen (1)  Recent policies of Xiamen to promote inward and outward investment In recent years, Xiamen has formulated a series of encouraging policies to promote investment and cooperation. 1 )  D I R E C T S U B S I D I E S

i)  Investment subsidy a

Subsidy for investment in Taiwan, China: RMB0.2 per US dollar based on the actual investment remitted to Taiwan, China. RMB0.25 per US dollar for investment in Kinmen. b Subsidy for investment in BRI countries and regions, namely Iran, Sri Lanka, India, Vietnam, Thailand, Singapore, the Philippines, Indonesia, and Malaysia: RMB0.2 per US dollar based on the actual amount of investment remitted. c Subsidy for cooperation projects in agriculture, forestry, fishery and mining: RMB0.2 per US dollar based on the actual amount of investment remitted. d For overseas investment other than the above, a subsidy of RMB0.05 per US dollar shall be provided based on the actual amount of investment remitted. ii) Upfront costs subsidy. For enterprises engaged in overseas investment (excluding transfer of existing overseas investment stakes between Chinese enterprises) and overseas cooperation in agriculture, forestry, animal husbandry, fishery and mining, the legal, technical and business consultation fees, survey and investigation fees incurred for commissioning qualified professional organizations to get the project approved before the registration (filing) and purchase of resource certificate in the host country or before the contract (agreement) is signed, the costs for the feasibility study report and safety assessment report, purchase of normative documents and bidding document, the information fees for purchase of normative documents and tender documents shall be covered by a subsidy up to 50% of the actual expenses incurred. Each project can only receive this subsidy once. This does not apply to capital increment projects. iii) Resource transportation subsidy. If a Xiamen enterprise that carries out overseas resource development and cooperation projects in agriculture, forestry, fishery and animal husbandry seeks to ship equity products it gains from the cooperation back to China, or if a Xiamen enterprise that engages in overseas project contracting would like to ship back resource products that it gains from the project whose total value is below the actual contractual value of the cooperation project, the enterprise concerned will be entitled to a subsidy for up to 50% of the transportation fees and insurance premiums from the project site to a Chinese port, with a cap of RMB1 million a year or RMB2 million a year

124  Development overview for key projects. The actual amount of resource products shipped shall be determined based on customs records. iv)  Subsidy for the personal accident insurance and work-related injury insurance for overseas project staff. A subsidy is to cover up to 50% of the actual premiums of personal accident insurance and work-related injury insurance for Chinese staff members sent abroad by Xiamen enterprises that engage in overseas investment and cooperation. The maximum insured amount per person is RMB1 million. v) Subsidy for overseas investment insurance. Up to 50% of the premium of overseas investment insurance shall be covered by subsidy for Xiamen enterprise to carry out overseas investment and cooperation projects. vi)  Subsidies for overseas investment service platform and labor service platform. A subsidy shall be provided to cover up to 50% of the actual expenditure on building the overseas investment service platforms and labor service platforms (including equipment and website building costs, and the like) approved or confirmed by the competent authorities of Xiamen. The subsidy shall cover all such expenditures if a platform is approved designated by the competent authorities of Xiamen to host major events for the promotion of the city’s foreign economic work. vii)  Subsidy for training of outbound labor. The subsidy covers the costs of training programs to help outbound laborers adapt the local environment. It is provided based on the qualifications obtained after the training as approved by the competent authorities and the actual number of people dispatched. For ordinary laborers (e.g., nannies, cleaners, loading and unloading workers, ordinary construction workers and ordinary waiters) the subsidy shall be no more than RMB400 per person; while for high-end laborers (e.g., college graduates or people with higher degrees, or seafarers, cooks, technicians, clerks, flight attendants, management personnel and IT talents), the subsidy shall be no more than RMB600 per person. viii) Subsidy for overseas emergency response. An overseas emergency refers to unexpected incidents like a terrorist attack or warfare, or other force majeure, which poses threats to the safety of or causes casualty of personnel dispatched by an enterprise engaged in overseas investment and cooperation. Expenses incurred by responses to such emergencies may include the costs of passport and visa application, international travel expenses and incidental overseas expenses of people sent to the site to deal with the emergency. The subsidy amount shall be determined according to the standard for temporary outbound trips for business purposes. ix) Subsidy for letter of guarantee costs of overseas project contracting. The subsidy covers up to 50% of the charges of letters of guarantee for bidding, contract performance, prepayment, etc. x)  Reward for overseas project contracting. Overseas contracted projects whose annual turnover exceed US$50 million are entitled to a lump sum reward of up

Regional investment analysis report 2015  125 to RMB500,000, those with an annual turnover between US$25 million and US$50 million are entitled to a lump sum reward of up to RMB300,000, and those with an annual turnover between US$10 million and US$25 million are entitled to a lump sum reward of up to RMB200,000. 2 )  L O A N W I T H D I S C O U N T I N T E R E S T

An interest discount shall be given to loans borrowed by enterprises engaged in overseas investment and overseas project contracting for one year or more. The loan may be obtained from a bank in China or from an overseas branch of a Chinese bank by a holding company established by the enterprise abroad; loans for overseas projects of franchised operation may be obtained by overseas project companies from a bank in China or from an overseas branch of a Chinese bank. The interest discount for RMB and foreign currency loans shall not exceed 50% of the actual interest of the project and for foreign currency loans, conversion shall be based on the middle rate of the People’s Bank of China on December 31 of the year concerned. The discount shall last no more than five years. 3 )  S U B S I D Y L I M I T S

The subsidy limits shall be set according to the scale of actual overseas investment of an enterprise in the current year, and an enterprise entitled to less than RMB10,000 of subsidy shall not be supported. i)  Upper limit of scale-based subsidies. If the accumulative overseas investment of an enterprise in the current year is less than US$50 million, the total amount of subsidy it receives for the year shall not exceed RMB2 million. If the accumulative overseas investment of an enterprise in the current year is more than US$50 million but no more than US$100 million, the enterprise shall receive a total subsidy of no more than RMB3.5 million for the year. If the accumulative overseas investment of an enterprise in the current year is more than US$100 million, the total amount of subsidy it receives shall not exceed RMB5 million. ii)  Subsidy for major projects. Major strategic projects within the BRI framework in Xiamen are not subject to the abovementioned subsidy limits, and each relevant enterprise can receive a total subsidy up to RMB5 million a year. E-commerce: in accordance with the Circular of Xiamen Municipal People’s Government on Issuing Several Measures to Promote the Development of E-Commerce (XF [2015] No. 67), key e-commerce enterprises which have built or rented warehousing facilities larger than 1,000 square meters each in the previous year with a contract of three years or more to serve as their logistics hub, e-commerce distribution center, overseas warehouse, or bonded warehouse, a lump-sum subsidy of RMB100 per square meter shall be granted according to the storage area after evaluation and approval, with an upper limit of RMB1 million for each facility and RMB3 million for each enterprise. If such facilities are in major MSR countries, the subsidy standards shall be raised by 50%.

126  Development overview Cross-border investment and financing: According to the Guiding Opinion of the People’s Bank of China on financial support for the China (Fujian) Pilot Free Trade Zone issued on December 11, 2015, the China (Fujian) Pilot Free Trade Zone has a convertible of capital account within a set limit. Chinese institutions registered in the pilot free trade zone and outside the negative list may carry out cross-border investment and financing activities and voluntary foreign exchange settlement and sales on their own according to the annual cross-border revenue and expenditure as long as the total amount of one single institution does not exceed the limit of US$10 million. (2)  Inward and outward investment of Xiamen in 2015 1 )  U T I L I Z A T I O N O F F O R E I G N C A P I T A L

In 2015, up to 726 new foreign-funded enterprises were established in Xiamen, an increase of 74.1% over 2014, and the contractual utilization of foreign capital was US$4.16 billion, an increase of 45.9% year-on-year and 195.5% of the annual target (US$2.13 billion). The actual utilization of foreign capital was US$2.09 billion, up 6.2% year-on-year, and 100.2% of the annual target (US$2.09 billion). First, the total foreign capital utilized reached an all-time high. In 2015, Xiamen made a new breakthrough in the use of foreign capital. The contractual utilization of foreign capital reached US$4.16 billion, surpassing the US$4 billion mark for the first time; and the actual use of foreign capital reached a record high of US$2.09 billion, ranking first in Fujian Province. Second, new foreign investment and capital increment increased substantially. A total of 726 new foreign-funded enterprises were set up in 2015, and the amount of foreign capital utilized was US$2.78 billion, an increase of 31.8% over 2014. During the year, a total of 118 foreign-funded enterprises increased their capital, with a contractual foreign capital of US$1.29 billion, an increase of 22.2% over 2014. Third, the modern services industry achieved remarkable results in absorbing foreign capital. In 2015, Xiamen’s actual utilization of foreign capital in the primary, secondary and tertiary industries accounted respectively for 0.1%, 37.2% and 62.8% of the total. Specifically, foreign capital in the service sector grew rapidly and 682 new service enterprises were set up, with a contractual foreign capital of US$3 billion and US$1.31 billion actually used, up 86.9%, 66.2% and 11% over 2014 respectively. The utilization of foreign capital in finance, investment management, financial leasing, logistics, software and information and tourism further diversified the foreign investment portfolio of the modern services industry in Xiamen. Fourth, the use of foreign capital in the advanced manufacturing industry further expanded. In 2015, 36 new manufacturing enterprises were set up and the contractual foreign capital utilization amounted to US$1.04 billion, accounting for 25.6% of the city’s total, creating new impetus for advanced manufacturing, especially display panel, mechanical equipment, new energy, new materials and biomedicine.

Regional investment analysis report 2015  127 Fifth, major projects promoted industrial agglomeration and upgrading. There were 137 foreign investment projects over US$10 million in value in 2015, with a total contractual foreign investment of US$3.45 billion, an increase of 25.5% over 2014, accounting for 83% of the total contractual foreign capital in Xiamen. Among them, 108 were key industrial development projects, and the contractual utilization of foreign capital was US$2.96 billion, accounting for 85% of the total amount utilized by the 137 projects over US$10 million in value. In 2015, Fortune Global 500 companies set up two new facilities and increased capital for two projects in Xiamen, with a total contractual foreign capital of US$120 million. The introduction of major projects played an important role in promoting industrial agglomeration and upgrading the industrial structure. Sixth, the quantity and quality of Taiwan-funded projects improved. In 2015, there were 361 new enterprises (including the third place) established in Xiamen by Taiwan enterprises, with US$870 million of contractual investment and US$370 million of actual investment, an increase of 1.6 times, 99.5% and 61.2% over 2014 respectively. Taiwan investment covered the areas of optoelectronics, medical equipment, auto parts, health, medicine, food, finance, logistics, crossborder e-commerce and quality improvement. Seventh, foreign capital utilization in the Xiamen part of the China (Fujian) Pilot Free Trade Zone is in good shape. A total of 367 foreign-funded enterprises were set up there, with a contractual foreign capital of US$1.74 billion, accounting for 43.1% of the city’s total. Joint investment promotion produced good results, bringing 218 projects to various districts with a total contractual foreign investment of US$1.03 billion, making a contribution of nearly 60% to the pilot free trade zone. 2 )  O V E R S E A S I N V E S T M E N T

In 2015, a total of 132 overseas investment projects were filed in Xiamen City, an increase of 30.7%, with a total contractual outward investment of US$2.19 billion, an increase of 109%. These included US$2.14 billion of investment from the Chinese side, an increase of 112.5%, accounting for 40.7% of the total, and the amount actually remitted from China was US$580 million, an increase of 3.7%. Xiamen enterprises ran a total of 778 overseas investment projects in nearly 60 countries and regions in the world with a total contractual outward investment of US$6.19 billion, including US$5.26 billion from the Chinese side. First, the total outward investment reached a new high and the gap between inward and outward investment narrowed. After surpassing the US$1 billion mark for the first time in 2014, overseas investment of Xiamen saw a new round of explosive growth in 2015. The total amount of new investment from the Chinese side reached US$2.14 billion, reaching beyond the US$2 billion mark for the first time and accounting for 40.7% of the total. For the first time, overseas investment was higher than foreign capital utilization. Second, the establishment of overseas enterprises and overseas M&A both increased sharply while capital increment slowed down. In 2015, the enthusiasm

128  Development overview for overseas investment remained high with overseas enterprises established and acquired. Xiamen enterprises set up a total of 80 new overseas companies with an investment of US$1.23 billion, an increase of 138%, accounting for 57.5% of the total investment. Specifically, 62 wholly Chinese-owned enterprises were set up with an investment of US$1.05 billion, accounting for 85% of new investment. There were 17 new overseas M&A projects, with an investment of US$620 million from the Chinese side, an increase of 272.7%, accounting for 28.8% of the total. There were 32 capital increment projects, with an investment of US$290 million, a decrease of 31.6% over 2014. Third, Xiamen’s strength in overseas investment grew significantly, setting a number of records. In 2015, Xiamen enterprises launched 47 new projects involving more than US$10 million of investment, an increase of 67.9%, accounting for 35.6% of all new projects, an increase of 7.9 percentage points over 2014. The investment of these projects amounted to US$1.88 billion. In 2015, 10 new projects involved over US$50 million of outward investment from Xiamen enterprises, and five of them involved over US$100 million of investment. The total investment from the Chinese side of these projects reached US$1.17 billion. Xiamen C&D Corporation Limited invested US$300 million to set up C&D (Hong Kong) Co., Ltd., and this was the large outward investment of Xiamen enterprises to establish new overseas facilities. Fourth, cooperation in emerging industries strengthened and investment structure improved. In 2015, Xiamen’s overseas investment turned from a pattern featuring concentration in commerce and trade to a more balanced distribution among various industries. Xiamen enterprises invested in overseas M&A projects in education for the first time and 92.7% of its outward investment was in wholesale and retail sales, business services, education, manufacturing, and agriculture, forestry and fishery. (3)  Investment in and from BRI countries in 2015 1)  I N V E S T M E N T O F B R I C O U N T R I E S I N X I A M E N

In 2015, enterprises from BRI countries invested in 54 projects in Xiamen, up 80% over 2014, with a total contractual foreign investment of US$98.79 million, an increase of 16.5%, and an actual utilization of foreign capital of US$109 million, down by 41.5%. The investment mainly came from developed countries such as Singapore and Malaysia and was mainly put into electronics, machinery, technical services and commercial and trade industries. The proportion of capital increment was relatively large in both contractual and actual utilization of foreign capital in 2015, but there were many more new projects in the leasing and business services industry than before, bringing in more foreign capital. 2)  X I A M E N’S I N V E S T M E N T I N B R I C O U N T R I E S

In 2015, Xiamen enterprises invested in 25 projects in BRI countries, mainly in agriculture, forestry and fishery and the manufacturing industry. The total

Regional investment analysis report 2015  129 investment registered US$460 million, an increase of 8.5 times. They invested US$1 billion in 59 projects in the Hong Kong SAR, mainly in wholesale and retail sales and business services, an increase of 23.7%. Outward investment in Europe and America, US$650 million in total, up 2.4 times, went to 38 projects mainly in manufacturing and business services. There were also five outward investment projects in Africa, mainly in manufacturing and agriculture, forestry and fishery, with an investment of US$210 million, a 25-fold increase. 3 )  P R O S P E C T S F O R 2016

In 2016, Xiamen will seize the historical opportunity of a new round of efforts for further opening-up, give play to its advantages in location, economy and trade, history, human resources and culture, accelerate its integration into the BRI and work more closely with East Asia, Central Asia and the Middle East, especially the ASEAN. It will innovate in institutions and mechanisms for openingup and accelerate the progress of a number of key projects for economic and trade and cultural exchanges. Xiamen will strive toward the forefront of China connectivity, inward and outward investment, trade and finance and marine cooperation with BRI countries and deepen educational, cultural, tourism and people-to-people exchanges with major BRI countries to establish more cordial and stable relationships with them. Efforts to build itself into a strategic pivot city on the MSR will also be stepped up. 9 Hainan (1)  Recent policies of Hainan to promote inward and outward investment In order to better serve enterprises going global and actively utilize overseas funds to promote its economic transformation and upgrading, Hainan Province has actively implemented a series of policies formulated by the National Development and Reform Commission (NDRC), the Ministry of Commerce (MOC) and the Ministry of Finance (MOF), and worked out a series of measures and detailed rules in line with its own conditions. Overseas investment: In 2015, in order to promote and standardize the “going global” of Hainan enterprises and accelerate the transformation of overseas investment management functions, Hainan Development and Reform Commission formulated the Implementation Measures for Filing Overseas Investment Projects in Hainan Province in light of the Administrative Measures for the Approval and Filing of Overseas Investment Projects (NDRC Decree No. 9) and its own actual conditions. It strengthened the communication, coordination and information-sharing with the authorities in charge of commerce, customs, taxation, foreign exchange administration and entry–exit management, and enhanced the dynamic monitoring, in-progress and post-event supervision over the implementation of overseas investment projects. All efforts were pooled together to

130  Development overview promote the orderly implementation of overseas investment projects in accordance with the law. In addition, in accordance with the Circular of the Ministry of Finance and the Ministry of Commerce on Distributing the Measures for the Management of Special Funds for Overseas Investment and Cooperation (CQ [2013] No. 124), the Detailed Rules for Special Funds for Foreign Investment and Cooperation in Hainan Province was formulated based on the actual situation of overseas investment and cooperation in Hainan Province, in a bid to encourage Hainan enterprises to carry out overseas investment and cooperation in an orderly manner, improve their international competitiveness and standardize the management of funds for overseas investment and cooperation. The Special Fund for Foreign Investment and Cooperation (hereinafter referred to as the Cooperation Fund) mentioned in the Rules refers to the special fund provided by the central budget for Hainan Province to support overseas investment and cooperation activities such as overseas investment, overseas project contracting and overseas labor cooperation. The Cooperation Fund shall be jointly managed by the Department of Finance and the Department of Commerce of Hainan Province. The former is responsible for budget management and allocation of the Cooperation Fund. It shall determine key targets and distribution methods every year together with the latter, and supervise and inspect the use of the fund. The latter is responsible for management of the Cooperation Fund. It shall propose the key targets every year together with the former, organize, solicit and review project applications, put forward fund allocation plans, and conduct evaluation and supervision on the implementation of the funded projects. Foreign capital utilization: At present, Hainan mainly follows the Interim Provisions on Domestic Investment of Foreign-Funded Enterprises formulated by the former Ministry of Foreign Trade and Economic Cooperation and the State Administration for Industry and Commerce in 2000. In order to encourage more foreign enterprises to settle in Hainan, in 2010, Hainan started a campaign to get itself into the Catalogue of Advantageous Industries for Foreign Investment in Central and Western Regions of China in consideration of its actual conditions, and finally got the approval from the State Council in 2013. Hainan’s featured resources, featured agriculture and advantageous industries were highlighted in the Catalogue with 22 items listed, covering agriculture, manufacturing, communications and transportation, tourism, water conservancy, environmental and public facilities management, health, culture, sports and entertainment industries. Foreign investment projects within this scope may enjoy tax cuts and other preferential policies for encouraged foreign investment projects. The implementation of the Catalogue is of positive significance to Hainan’s utilization of foreign capital, enjoying preferential policies for foreign investment in central and western regions, and promoting the construction of an international tourist island. In addition, the Hainan Province Service Trade Innovation and Development Pilot Plan issued in May 2016 proposes encouraging foreign investment in tourism and in the development and construction of commercial scenic spots and facilities.

Regional investment analysis report 2015  131 (2)  Inward and outward investment of Hainan in 2015 1 )  U T I L I Z A T I O N O F F O R E I G N C A P I T A L I N H A I N A N

In 2015, Hainan Province actually used US$2.005 billion of foreign investment, up 6.2% year-on-year. It welcomed 71 new enterprises, up 18.33% year-on-year. The total contractual foreign investment was US$1.28 billion, up 83.65% year-on-year. In terms of the investment structure, in 2015, foreign-funded ­ enterprises in Hainan Province mainly invested in the service industry (real estate), manufacturing and construction. Specifically, foreign investment in the service industry (real estate) reached US$1,668 million, accounting for 83.18% of the total and taking a dominant position; foreign investment in the manufacturing industry was US$22.399 million, accounting for 11.17% of the total; the foreign capital used by the construction industry amounted to US$42.99 million, representing 2.14% of the total. In 2015, Hong Kong SAR, the Cayman Islands, Singapore and the Netherlands were major sources of foreign capital in Hainan. Specifically, Hong Kong SAR was the largest source, with an actual investment of US$1,778 million, 88.68% of the total. The Cayman Islands contributed US$133 million, or 6.6% of the total; Singapore contributed US$50.78 million, accounting for 2.5% of the total; and the Netherlands invested US$16.07 million, or 0.8% of the total. The problems of foreign capital utilization in Hainan Province are as follows: The sources of foreign capital are mainly Asian countries, and they contribute more than 90% of all foreign investment in Hainan. Investment concentrates in real estate and manufacturing. Hainan Province has not made enough efforts in publicity and investment promotion and its investment environment needs to be further improved. Besides, it does not have sound preferential policies for foreign investment. 2 )  O V E R S E A S I N V E S T M E N T O F H A I N A N E N T E R P R I S E S

The actual outward investment of Hainan enterprises in 2015 amounted to US$991 million, an increase of 27% over 2014, ranking 17th nationwide. Their investment mainly concentrated in the Hong Kong SAR, Singapore, Kazakhstan, and the United States, and major projects are HNA Group’s contractual acquisition of Swissport International Ltd., Geo-Jade Petroleum Corporation’s acquisition of KoZhan LLP of Kazakhstan, investment in Singapore by Hainan Huaxin International Holding Co., Ltd., and investment in the United States by Hainan Hengxing Juyuan Equity Investment Fund Partnership. The difficulties faced by Hainan enterprises in “going global” mainly include: First, the enterprises are small in scale and find it difficult to secure financing for their projects. Most of the enterprises in Hainan Province are small and mediumsized enterprises (SMEs), and many lack financing capacity and fund for ­international production capacity and equipment manufacturing cooperation. So, it is difficult for them to obtain the funding required for going global. Second, they lack relevant information. Enterprises have weak capability to study the

132  Development overview investment and trade environment in foreign countries and lack information about relevant policies, laws and regulations, investment risks, economic, political situation and market policies of relevant countries, so they cannot make accurate judgments on the foreign market and the risks of overseas investment. (3)  Investment in and from BRI countries in 2015 1 )  I N V E S T M E N T O F B R I C O U N T R I E S I N H A I N A N P R O V I N C E

In 2015, contractual investment from Malaysia registered US$1.66 million in Hainan and the amount actually used was US$1.5 million, with a new enterprise established. Singapore’s contractual investment in the province was US$20.35 million and US$50.78 million was actually used, mainly in real estate, accounting for 2.5% of the total foreign investment in the province. Indonesia had a contractual investment of US$10,000 with a new enterprise established. Myanmar had a contractual investment of US$490,000 with a new enterprise established. 2 )  H A I N A N ’ S I N V E S T M E N T I N B R I C O U N T R I E S

In 2015, Hainan enterprises invested in five BRI countries, with a total registered amount of US$310 million and an actual investment of US$220 million. The main projects are as follows: Hainan Huaxin International Holdings Co., Ltd. invested US$80 million in Singapore for mining, coal, oil, mineral products and other commodity transactions; Geo-Jade Petroleum Corporation invested US$139 million in Kazakhstan, mainly for oil and gas exploration; Hainan Yingli New Energy Resources Co., Ltd. invested in a PV project in Thailand. (4)  Prospects for 2016 In terms of the utilization of foreign capital, in 2016, Hainan will focus on attracting investment in the 12 key industries in its 13th Five-Year Plan including tourism industry, tropical high-efficiency agriculture, Internet industry, medical and health industry, exhibition industry, modern logistics industry, oil and gas industry, pharmaceutical industry, low-carbon manufacturing industry, high-tech, education, and culture and sports industry in the principle of “unified layout, industrial concentration, intensive land use and strict compliance with environmental regulations.” It will lay emphasis on investment promotion activities in the Hong Kong SAR and Taiwan of China, with a focus on modern service industries such as tourism, health, finance and insurance, exhibition industry and modern logistics in the Hong Kong SAR and a focus on tourism, tropical high-efficiency agriculture, medical and health industry, and low-carbon manufacturing in Taiwan, China. As for overseas investment, Hainan Province will make sound deployment in major countries and industries in its going-global strategy, and encourage Hainan’s leading enterprises in aviation, energy, mineral resources and tropical agriculture to make overseas investment. It will make good use of the special fund

Regional investment analysis report 2015  133 for foreign trade and economic cooperation to increase support for the Belt and Road Initiative, and international capacity and equipment manufacturing cooperation. It will intensify follow-up services for overseas investment projects, focusing on the M&A of HNA Group in the European service industry as well as the smooth implementation of the company’s aviation cooperation projects in Africa; the overseas oil and gas projects of Geo-Jade Petroleum, overseas automobile assembly cooperation project of Haima Motor Corporation and the investment projects of Hainan Agricultural Reclamation Investment Holding Group Co., Ltd. in Africa and ASEAN countries. 10 Shandong With the continuous implementation of the BRI, Shandong showed a favorable trend in opening-up and remained active in inward and outward investment. In 2015, the province approved 1,509 foreign enterprises, a year-on-year increase of 11.6%. Contractual investment amounted to US$20.04 billion, up 25.7%. The foreign investment actually used was US$16.3 billion, up 7.3%. There were 589 overseas investment enterprises and institutions registered and approved across the province, with the investment from the Chinese side totaling US$15.6 billion, up by 12.4% and 148% respectively. Overseas investment enterprises with actual investment numbered 441, with US$5.78 billion invested from the Chinese side. (1)  Inward and outward investment of Shandong in 2015 1 )  G R O W T H I N I N W A R D A N D O U T W A R D I N V E S T M E N T

i)  FDI continued to grow steadily. In 2015, the Hong Kong SAR was a major source of foreign capital in Shandong, with an amount of US$7.55 billion actually used in the province, accounting for 46.3% of the total. Shandong saw strong growth in contractual and actual foreign investment from the Republic of Korea, Japan and the EU. The financial services industry, scientific research and technology industry and information software industry played a significant role, with the actual foreign investment increased by 48%, 43.6% and 5.3 times respectively. In particular, foreign investment in the financial services industry increased rapidly, with contractual foreign investment up by 87.8% to US$3.27 billion, ranking first in the service sector. ii)  Enterprises quickened their pace to go global. In 2015, Shandong enterprises actually invested US$5.78 billion overseas. As the number of enterprises engaged in international capacity and equipment manufacturing cooperation grew and more such projects were launched, the investment increased accordingly. Specifically, Chinese investment rose by 2.7 times to US$1.68 billion. The investment in BRI countries grew rapidly. The filed and approved Chinese investment in BRI countries stood at US$5.02 billion, an increase of 78.5% year-on-year.

134  Development overview 2 )  I N D U S T R Y A N D C O U N T R Y D I S T R I B U T I O N O F I N W A R D A N D OUTWARD INVESTMENT

In 2015, in the Chinese investment filed and approved for Shandong, the new contractual amount of overseas projects amounted to US$11.62 billion with the turnover reaching US$10.17 billion, up 14.3% and 10% respectively. A total of 60,764 laborers were dispatched overseas, a rise of 1.4%. i)  FDI in different industries in Shandong. To be specific, in 2015, FDI in the primary industry decreased sharply by 33.3% year-on-year, that in the secondary industry increased steadily by 7.3% and that in the tertiary industry increased rapidly by 11.8%. See Table 2.5 for details. ii)  FDI from different countries (regions) in Shandong. In 2015, FDI in Shandong achieved a steady growth of 7.3% year-on-year on the whole, but varied in specific amount from different regions. FDI from South America saw the fastest growth at 89.8% year-on-year, while that from North America incurred a most obvious decline of 27.7% year-on-year. See Table 2.6. iii) Overseas investment. Overseas investment was unbalanced in Shandong. Specifically, Qingdao’s overseas investment grew at the fastest rate of 22.7% year-on-year while that of Zaozhuang, Taian, Linyi and Dezhou grew slowly by less than 1% year-on-year, and that of Laiwu was zero. See Table 2.7. 3 )  C H A L L E N G E S A N D O P P O R T U N I T I E S

The world economy is expected to continue with a slow recovery and there are still many uncertain and unstable factors in the domestic and overseas economic environment, resulting in many challenges for Shandong’s utilization of foreign capital and overseas investment. First, considering an unstable foundation of international economic recovery, the external environment for foreign capital utilization and overseas investment is complex. Economic growth in advanced economies fluctuates at low positions, with endogenous driving force remaining weak, and emerging economies generally have slow economic growth. Some countries are facing the most difficult situation since the financial crisis. Second, with the signing of the TPP agreement, the international investment and trade rules are undergoing great changes, and Shandong is facing new challenges in its effort to expand the utilization of foreign capital. Third, commodity prices continue to fluctuate, and outward investment enterprises are facing operational risks. Fourth, foreign preferential loans have been reduced, along with increasing difficulties in application. Regardless of these, there are still many opportunities for Shandong to expand its utilization of foreign capital and overseas investment. First, the BRI provides powerful support for enterprises to go global. Second, the in-depth reform of foreign-related systems and mechanisms is conducive to accelerating

Total Primary industry Agriculture, forestry, husbandry, and fishery Secondary industry Mining Manufacturing Textiles Chemical raw material and chemical product manufacturing Pharmaceutical manufacturing General equipment manufacturing Special-purpose equipment manufacturing Manufacturing of communications equipment, computers and other electronic equipment Other manufacturing Power, heat, gas and water production and supply Construction Tertiary industry Transportation, warehousing and postal services Information transmission, computer services and software Wholesale and retail sales Accommodation and catering Finance Real estate Leasing and business services Scientific research, technical services and geological surveying Water, environment and public facilities management Life services and other services Education Health, social security and social welfare Culture, sports and entertainment

Industry

11.6 –27.7 –27.7 5.7 –100.0 5.5 –33.3 –24.0 –10.0 –8.2 72.1 –8.5 5.6 30.4 –11.1 18.0 –26.9 34.8 34.2 2.4 28.6 –34.6 –15.9 8.3 0.0 0.0 200.0 100.0 100.0

1,509 34 34 556 0 518 6 19 9 67 74 43 300 30 8 919 19 31 545 43 45 17 95 91 4 12 3 6 8

495,120 48,206 19,949 1,054,770 79,502 25,848 235,796 1,811 326,820 147,365 64,896 164,383 8,641 –7,609 3,432 2,903 982

892,615 300 824,160 8,029 31,540 11,986 114,494 126,445 36,546

2,004,467 57,082 57,082

14.3 36.3 – 44.2 –4.9 4,729 34.5 –72.4 87.8 43.6 –10.8 61.7 558.1 – 192.6 –41.0 –19.4

10.6 –87.5 7.1 –71.0 –43.4 1.9 5.3 73.3 –38.1

25.6 0.0 0.0

Year-on-year growth (%)

Amount (US$10,000)

Number

Year-on-year growth (%)

Contractual foreign investment

Project

Table 2.5  FDI in different industries of Shandong Province in 2015

519,354 37,090 5,312 606,709 50,250 25,802 95,426 5,332 134,284 155,008 38,607 90,883 2,000 10 3,720 2,351 3,036

983,152 8,301 932,448 19,916 73,064 15,387 116,378 136,167 52,182

1,630,090 40,230 40,230

Amount (US$10,000)

–4.6 –12.9 138.8 11.8 –33.8 531.9 –7.0 216.3 48.0 6.2 –16.5 43.6 –19.6 –99.8 304.8 4,602.0 –30.9

7.3 26.1 7.8 –30.0 43.3 –0.2 70.2 166.3 –50.8

7.3 –33.3 –33.3

Year-on-year growth (%)

Actual foreign investment

136  Development overview Table 2.6  FDI from different countries (regions) in Shandong in 2015 Country/ region

Project

Contractual foreign investment

Foreign investment used

Number Year-onyear growth (%)

Amount Year-on(US$10,000) year growth (%)

Amount Year-on(US$10,000) year growth (%)

11.6 12.0 1.8

2,004,467 1,675,094 1,149,956

25.6 25.4 26.6

1,630,090 1,232,535 755,786

7.3 6.8 –1.0

1.8

1,145,168

26.9

754,834

–1.0

32.8

302,779

30.2

206,717

35.1

–27.6 20.0

62,275 100,072

22.0 74.9

73,032 43,292

26.2 –11.0

–32.8 –40.4 100.0 25.3 28.9 88.2 5.9 8.3 13.6

45,070 32,490 7,501 82,405 62,550 19,591 6,465 12,825 50,303

–45.3 –55.5 27.5 49.9 40.3 264.1 175.7 29.6 86.3

147,984 139,899 9,667 80,936 74,911 21,722 1,892 4,553 90,318

18.3 15.7 –8.0 1.5 8.1 108.4 –78.9 –15.0 89.8

58.3

50,889

85.7

61,342

40.4

1.1

100,674

19.4

113,358

–27.7

2.9 –4.0 –5.1 21.1 –16.1 –13.3

71,392 6,615 23,707 15,623 64,783 64,741

40.2 –67.4 –42.7 –21.0 40.9 44.2

48,894 9,922 24,324 5,344 78,952 77,876

–61.3 40.0 35.9 –44.5 49.0 46.9

Total 1,509 Asia 1,205 Hong Kong 397 and Macao SARs Hong Kong 393 SAR Republic of 555 Korea Japan 55 Taiwan, 120 China ASEAN 43 Singapore 31 Africa 22 Europe 124 EU 107 Germany 32 UK 18 France 13 South 25 America British Virgin 19 Islands North 96 America United States 71 Canada 24 Oceania 37 Australia 23 Others 26 Investment 26 from investment companies

the formation of a new opening-up pattern. Third, China is boosting international cooperation in production capacity and equipment manufacturing and it helps speed up the transfer of production capacity and expands the space for economic development. Fourth, the construction of the China–ROK Free Trade Zone is likely to bring about new momentum for the opening-up of Shandong.

Regional investment analysis report 2015  137 Table 2.7  Actual overseas investment of each city in Shandong in 2015 City

Amount (US$10,000)

Year-on-year growth (%) Proportion (%)

Total Jinan Qingdao Zibo Zaozhuang Dongying Yantai Weifang Jining Taian Weihai Rizhao Laiwu Linyi Dezhou Liaocheng Binzhou Heze

577,806 56,772 130,859 30,738 2,131 21,666 75,417 44,883 67,475 2,962 30,751 28,402 221 3,776 994 16,324 40,566 23,869

31.0 291.6 21.2 50.6 254.6 535.6 39.3 64.7 8.9 4.6 59.4 138.8 452.5 –62.1 –33.2 3,560.0 252.5 959.0

100 9.8 22.7 5.3 0.4 3.8 13.1 7.8 11.7 0.5 5.3 4.9 0.0 0.7 0.2 2.8 7.0 4.1

4 )  D E V E L O P M E N T T R E N D P R O S P E C T S F O R 2016

i) General idea. In conformity to China’s effort to deeply integrate into the world economy, Shandong will thoroughly act upon messages conveyed at the 18th National Congress of the CPC Central Committee and the third, fourth and fifth plenary sessions of the CPC Central Committee, as well as the series of important speeches made by President Xi Jinping and the important speeches and instructions made during his visit to Shandong with a view to shaping new advantages in the development of an open economy and promote economic transformation and development. On this basis, Shandong will implement a more proactive opening-up strategy and further innovate in and improve its business environment. Also, it will make active efforts to create a new engine for open development, constantly explore new ways for further opening-up and make great efforts to open up new space for utilizing foreign capital. By making full use of its geographical advantages, Shandong, a coastal province, will speed up the building of the China–ROK Free Trade Zone in an effort to build a new high for opening-up. It will step up the development of new competitive advantages for participating in and leading international economic cooperation and promote reform, development and innovation through opening-up, thus providing strong support for steady economic growth and social progress. ii) Objectives. It is estimated that Shandong will actually utilize US$18.75 billion of foreign capital in 2016, an increase of 4.8%, of which foreign investment will be US$17.12 billion, up 5%, and foreign loans will rise by 1.8% to US$1.631 billion. Overseas foreign direct investment (OFDI) will reach US$6.65 billion, an increase of about 15%.

138  Development overview iii) Priorities. First, Shandong will speed up the construction of major open investment vehicles and make new breakthroughs in attracting foreign investment. It will actively promote the construction of the China–ROK Free Trade Zone to deepen investment cooperation between Shandong and the Republic of Korea. Shandong will spare no efforts in applying for the establishment of a pilot free trade zone. After capturing a correct orientation for development, it will accelerate the planning of the proposed free trade zone to highlight Shandong characteristics and enhance overall coordination to boost new breakthroughs in its opening-up. Guided by clear functional orientations and development directions for development zones, Shandong will gather high-end key resources to actively promote innovation in systems and mechanisms, build new development momentums and create new advantages in a bid to build them into important platforms for Shandong to undertake industrial transfer and attract investment. Second, Shandong will advance the integration of investment attraction with the introduction of intelligence and technologies so as to utilize foreign capital in a more effective way. Efforts will be made to expand the opening-up of the service sector. Taking the service sector as a key area for attracting investment, Shandong will encourage foreign investment to focus on the development of modern service industries such as finance and insurance, science and technology information, modern logistics, services outsourcing, tourism exhibitions, rating and evaluation, accounting and audit, legal services, brand creativity, and human resources, in an effort to build up new advantages in service industry development through win-win cooperation. It will support and guide foreign investment in major infrastructure development and in the reform of state-owned enterprises to utilize foreign capital, thus to fill gaps in government funds and use foreign advanced management experience to drive institutional innovation. Third, Shandong will accelerate international capacity cooperation and deploy industry chains globally. To this end, Shandong will actively push enterprises in key industries and areas covering steel, cement, electrolytic aluminum, construction machinery, chemical, automotive, light industry and textiles to go global. While strengthening cooperation in production capacity with key countries, it will, relying on the six cooperation corridors, key country cooperation plans and country-specific matchmaking programs, support enterprises to actively participate in foreign economic cooperation according to relevant deployment at the national level. It will support enterprises to build featured industrial parks and industrial clusters abroad and further expand cooperation in energy and resources. Fourth, Shandong will expand the areas where loans are granted and enhance the demonstration and innovation effects of foreign loans. For this reason, it will continue to expand the scale of overseas financing of enterprises. Centered on key areas prioritized by the province in development, it will select a number of projects in line with the national industrial policies and requiring the introduction of foreign advanced technical equipment, pilot enterprises in overseas bond issuance, and make good use of international commercial loans by winning over preferential foreign loans in key areas. Foreign loans projects will be screened and reserved with a focus on the integration of medical care and pension, urban

Regional investment analysis report 2015  139 and rural integration, regional integration, upgrading and transformation of transport infrastructure, ecological construction, vocational education, food safety, rural reconstruction and industrial energy conservation. iv) Measures. First, Shandong will strengthen study on policies and measures to boost economic and social opening-up and development. It will earnestly act upon ZF [2015] No. 13 and study and formulate its own policies and measures for developing a new open economic system. Studies on key countries of international capacity and equipment manufacturing cooperation will be strengthened. The process of formulating management measures on financial fund support for overseas investment will be accelerated. Second, Shandong will innovate the mechanism of attracting investment and create a better business environment. Efforts will be furthered to attract investment from key countries and regions. Relying on the major investment attraction platforms and cooperation mechanisms, Shandong will further improve the pertinence and effectiveness of investment attraction by targeting Fortune Global 500 companies and leading enterprises in each industry in the Republic of Korea, Germany and the United States. To this end, support measures and services will be worked out and the investment environment improved. Strength will be devoted to meeting demands for such key factors as land use, electricity and water for large foreign investment projects, remove difficulties for foreign investors regarding recruitment, medical care for employees and schooling for their children, attracting new enterprises to settle in Shandong and assisting old ones in seeking capital increment, so as to realize business-oriented investment attraction. Third, Shandong will actively promote international capacity and equipment manufacturing cooperation. Relying on the existing friendship with foreign provinces and cities, it will actively explore new cooperation areas, open up outward transfer channels for advantageous production capacity and access to energy resources, and broaden channels for cooperation and exchange with foreign countries. In addition to deepening and promoting the collaboration between provincial and central authorities, Shandong will also actively participate in multilateral and bilateral investment promotion activities in cooperation with partners from foreign countries. In order to foster a number of international enterprises, competitive Shandong enterprises are encouraged to improve their capital structure, expand business scale, cultivate international brands and improve international competitiveness by means of transnational M&A, overseas listing and cooperation with strong domestic and foreign partners. Furthermore, Shandong will make more efforts to establish a risk control system for overseas investment, and strengthen cooperation with financial and insurance institutions to help enterprises effectively forestall investment risks and steadily push forward overseas investment projects. Fourth, Shandong will further promote the reform of foreign debt management. In line with the messages conveyed in the Circular on Promoting the Reform of Registration-based Management of Foreign Debt Issuance by Enterprises, it will guide key local enterprises to issue more bonds overseas, take active actions to get itself into the pilot reform of lump-sum foreign debt management and make better

140  Development overview use of low-cost funds in the domestic capital market to boost investment and ensure steady growth. Focusing on advancing the issuance of US$1 billion of bonds overseas by Shandong Iron & Steel Group, Shandong will accelerate the link-up and construction of foreign loan projects such as the Confucius and Mencius cultural heritage protection project funded by the World Bank and the Phase II projects of the pilot program of energy conservation and emission reduction supported by the Asian Development Bank, so as to give better play to the positive role of foreign loans in promoting economic and social development. (2)  Investment in and from BRI countries in 2015 1 )  I N V E S T M E N T I N B R I C O U N T R I E S

Centered around participation in the implementation of BRI countries, Shandong expedited the construction of overseas industrial parks and enabled local enterprises to go global in clusters. Shandong is building eight economic and trade parks in BRI countries, with a total investment of US$2.3 billion. Up to 187 enterprises have settled in these parks, with a total output value of US$4.6 billion and a tax payment of US$200 million to the host countries. This has created over 10,000 jobs for the local people in relevant countries and regions. The Haier-Ruba ­Economic Zone constructed by Haier Group in Pakistan is the first national-level overseas economic and trade cooperation zone of China. Seven enterprises settled in the zone with an annual output of 1.5 million sets of household appliances, making Haier the top household appliance brand in Pakistan. The China– Russia Tomsk State Wood Industry and Trade Cooperation Zone, constructed by AVIC Forestry Co., Ltd., has completed an investment of US$400 million, attracting 20 enterprises from China, the United States and Russia, 16 of which have gone into operation. The China–Hungary BorsodChem Economic and Trade Cooperation Zone constructed by Wanhua Chemical Group Co., Ltd. has invested US$573 million in infrastructure, attracting 15 enterprises from China, Austria, France, Norway, Germany and the United States, including nine Chinese-funded processing and manufacturing enterprises. It has been built into one of the Chinese-funded parks with the largest investment and greatest efforts in construction around the world. Shandong decided to propel 190 overseas projects after screening, with a total planned investment of more than RMB450 billion, of which 65 projects have been started. In 2015, Shandong set up 124 enterprises in BRI countries, in which Chinese investment amounted to US$1.11 billion, an increase of 30.2%. Tire enterprises including Sailun Tyres, Linglong Tyre, Ogreen Group and Qingdao Sentury Tire Co., Ltd. set up production bases in Southeast Asia and Central Asia, and designed 41 million production capacity lines of which 26.5 million have been put into production. Wanhua Chemical Group invested EUR1.26 billion in the purchase of Hungary’s BorsodChem MCHZ, China’s largest investment project in Central and Eastern Europe so far. Shandong Weiqiao Pioneering Group’s aluminum oxide project with an annual output of

Regional investment analysis report 2015  141 2 million tons in Kalimantan, Indonesia is the first large aluminum oxide smelting project invested in by a Chinese enterprise overseas. 2 )  I N V E S T M E N T F R O M B R I C O U N T R I E S

The investment of BRI countries and regions in Shandong Province came mainly from Asia, Europe, Africa and elsewhere. Regarding investment from Asia, the total amount of foreign investment actually used in 2015 was US$11,595,030,000, up 6.8% year-on-year, of which the used investment from the Republic of Korea grew the fastest by 35.12% year-on-year. In terms of investment from Europe, the paid-in foreign investment registered US$809.36 million, up 8.07% year-on-year, and the actually used investment from Germany saw the greatest growth, up 108.40% year-on-year. In terms of investment from Africa, the foreign investment actually used in 2015 totaled US$96.67 million, down 8.05%. See Table 2.8. 3 )  P R O S P E C T S F O R 2016

The year 2016 is the beginning of the 13th Five-Year Plan period and the year of advancing the BRI on all fronts. To participate in the implementation of the BRI, Shandong will, in accordance with national strategies, adhere to the Table 2.8  Investment of BRI countries and regions in Shandong in 2015 Country/ region

Project

Contractual foreign investment

Number Year-onyear growth (%)

Amount

Asia 1,205 Hong Kong 397 SAR and Macao SAR Hong Kong 393 SAR Republic of 555 Korea Taiwan, China 120 ASEAN 43 Singapore 31 Africa 22 Europe 124 EU 107 Germany 32 United 18 Kingdom France 13

Foreign investment used

Year-onAmount year growth (%)

Year-onyear growth (%)

12.0 1.8

1,675,094 1,149,956

25.4 26.6

1,232,535 755,786

6.8 –1.0

1.8

1,145,168

26.9

754,834

–1.0

32.8

302,779

30.2

206,717

35.1

20.0 –32.8 –40.4 100.0 25.3 28.9 88.2 5.9

100,072 45,070 32,490 7,501 82,405 62,550 19,591 6,465

74.9 –45.3 –55.5 27.5 49.9 40.3 264.1 175.7

43,292 –11.0 147,984 18.3 139,899 15.7 9,667 –8.0 80,936 1.5 74,911 8.1 21,722 108.4 1,892 –78.9

8.3

12,825

29.6

4,553 –15.0

142  Development overview f­ our-pronged comprehensive strategy, firmly adhere to the five development concepts, and promote all the work centering on the goal of building itself into “five centers” and focusing on eight cooperation fields, in a bid to ensure progress in BRI implementation. It is estimated that in 2016, the import and export volume of Shandong from and to BRI countries will increase by about 8%, while overseas investment will rise by about 10%. i)  Strengthening work coordination and linkage, and accelerating policy communication. Shandong must take policy coordination as an important supporting measure and build a new mechanism for effective and smooth foreign exchanges and cooperation. In addition to improving the policy connection mechanism, it will follow closely the policy orientation of the central government to organize mutual exchanges and visits, high-level forums and other activities, and actively strengthen communication with BRI countries in respect of major strategies, major projects and major plans, and increase targeted cooperation. The information release mechanism will be reinforced. Shandong will set up an information release platform through central and provincial media, and systematically and comprehensively release authoritative information in connection with industrial policies, investment and financing environment and market risks in BRI countries, with a view to providing strong support for Shandong enterprises to go global. Efforts will be made to improve the work promotion mechanism and strengthen the reporting and communication with the relevant ministries and commissions at the national level. All cities will be urged to speed up the establishment of relevant institutions and specify responsibilities so that the going-global campaign can be carried out in a smooth manner with combined efforts at all levels. ii) Strengthening the construction of logistics channels, and accelerating the interconnection of facilities. Shandong will continue to prioritize facilities interconnectivity and speed up the connection with international economic cooperation corridors, with an aim to build a regional modern logistics center. In order to run more freight trains between China and Europe as soon as possible, backbone overland channels will be opened up to vigorously push forward intercity high-speed rail and inter-county highway projects. Backbone passageways on the sea will be opened up and marine transport service systems will be established to enhance the shipping capacity of Qingdao, Rizhao and Yantai ports. The province will push forward the construction of Shandong–Liaoning overland and maritime roll-on/roll-off channels and build an important international shipping hub for the BRI. Backbone air routes will be developed to build airports in Jinan, Qingdao and Yantai into regional aviation hubs. Positive efforts will be dedicated to opening up new intercontinental air lines, developing the “sky shuttle” business model and form a complete air transport network. iii)  Strengthening the exploration of international markets and accelerating free trade. Shandong will continue to focus on free trade, combine going-global and bringing-in strategies and vigorously carry out cooperation in international

Regional investment analysis report 2015  143 p­ roduction capacity and equipment manufacturing. Laying an emphasis on the transfer of advantageous and surplus production capacity, Shandong will ­thoroughly implement the strategy of “cutting overcapacity, reducing excess inventory, deleveraging, lowering costs, and strengthening areas of weakness” and the coordinated promotion framework agreement signed between Shandong Province and the NDRC, and study and formulate guiding opinions on the cooperation in key industries with foreign countries. Key enterprises such as agriculture, fishery, timber, non-ferrous metals, oil and gas will be encouraged to exploit resources in areas rich in energy resources. With a focus on the construction of overseas cooperation parks, Shandong will support the expansion and advancement of overseas parks of a certain scale, and push eligible enterprises to construct a number of overseas cooperation parks in BRI countries. Based on the construction of cooperation and exchange platforms, it will accelerate the development of the East Asia Marine Cooperation Platform, Weihai China–South Korea Regional Economic Cooperation Demonstration Zone, the China–South Korea (Yantai) Industrial Park, and standard technical service platform and overseas project investment service platforms in the BRI and support more enterprises to set up overseas trade representative offices. iv)  Strengthening the innovation in financing models and promoting finance. Shandong will continue to take financing as an important support to actively expand the field of financial cooperation and innovate in financial cooperation models. To enhance financial support, it will study and establish a guiding fund for the province to participate in the implementation of the BRI, and intensify the leverage effect of financial funds. It will encourage local financial institutions to offer favorable conditions to going-global projects. To strengthen financial cooperation, it will give full play to its advantages as the host of a pilot program for financial cooperation between China and the Republic of Korea, deepen financial cooperation between Shandong and the ROK, and support domestic institutions to issue bonds there. It will step up communication mechanisms with the Silk Road Fund and Asian Infrastructure Investment Bank, and win over more support for Shandong-initiated projects. It will intensify efforts in risk prevention and control, strengthen strategic cooperation with policy-­ oriented financial institutions such as China Export & Credit Insurance Corporation and expand the coverage of export credit insurance, providing financial support and risk protection for going-global enterprises. v) Strengthening international cultural exchanges and people-to-people bonds. Rooted in people-to-people bonds, Shandong will inherit and carry forward the spirit of friendship and cooperation along the ancient Silk Road and promote mutual appreciation and common prosperity of civilizations. In order to reinforce cultural exchanges, it will make intensive efforts to build the brand of “Confucius Hometown – Shandong, China,” implement the Shandong Cultural Silk Road plan, build the Shandong Charm, Cultural Shandong modularized project on international cultural exchange, and enhance mutual understanding and identification.

144  Development overview The cooperation in science and education with Russia, Belarus, Ukraine, Israel and other countries will be enhanced in a joint effort to establish Confucius Institutes with universities in countries along the Silk Road. Tourism cooperation will be strengthened to actively recommend the rich tourism resources of Shandong. Strength will also be devoted to accelerating the progress of fostering tourism products themed on “Hospitable Shandong – Explore the Source of Silk Road” and building Shandong into an important tourism destination for the BRI. 4 )  R E C O M M E N D A T I O N S

i) Strengthening guidance. It is recommended that the central government should strengthen guidance for local governments in promoting the BRI by way of talks instead of admonishments and further clarify the direction and focus of the work. The central government should accelerate the preparation of cooperation plans with key countries, take the lead in bridging all countries, study and propose key cooperation areas and projects, and enhance targeted cooperation. The central government is expected to coordinate industrial layout, cooperation areas, etc., direct all provinces and regions to participate in the implementation of the BRI in an orderly manner to form stronger synergy. ii) Increasing policy support. It is recommended to coordinate with financial institutions, especially the Silk Road Fund and Asian Infrastructure Investment Bank, to increase support for major national landmark projects in BRI countries. Priority should be given to key projects listed in the national BRI project database and major policy issues in the three-year rolling plan. Support should be increased for the construction of major international logistics channels, and for the extension of more China–Europe freight trains passing Jinan. Besides, support should be provided for the development of the China–Russia Tomsk State Wood Industry and Trade Cooperation Zone, the China–Hungary BorsodChem Economic and Trade Cooperation Zone, and the Central European Trade and Logistics Cooperation Zone. iii) Establishing a national BRI information platform. In order to release information in a timely manner about major policies and major issues in BRI countries and regions, and provide timely and accurate information for domestic market participants in the BRI, it is recommended that China establish a BRI information platform as soon as possible. At the same time, China should set up a think tank cooperation mechanism with BRI countries, pay close attention to changes in their policies, and strengthen communication with news agencies in these countries, so as to provide good public information support for enterprises that go global. 11 Qingdao In 2015, in the face of a complex and changing external environment and mounting downward pressure on the economy, Qingdao thoroughly acted upon the messages conveyed at the 18th National Congress and the third, fourth and fifth plenary sessions of the 18th Central Committee of the Communist Party of China.

Regional investment analysis report 2015  145 In accordance with the requirements of “looking for, setting and reaching targets, taking top positions, and creating standards” and “acceleration, promotion, innovation, efficiency and implementation,” as specified by the Municipal Party Committee and Municipal People’s Government of Qingdao, guided by the strategy to develop into an international city, Qingdao actively adapted itself to the new normal of economic development with a focus on deepening reform and promoting innovation. The utilization of foreign investment and the development of overseas investment in the city showed a good momentum, and made positive contributions to the overall economic and social development of the city. In 2015, Qingdao steadily promoted the reform of its foreign investment approval and management system, expanded the field of opening-up, and continuously optimized the environment for foreign investment. As a result, the foreign investment attracted by the city increased steadily, and the quality of utilizing foreign investment was further improved. Besides, Qingdao took the initiative to participate in the implementation of the BRI, actively supported local enterprises to go global and put forth efforts to foster new advantages in goingglobal and bringing-in, as well as in two-way opening-up. (1)  Utilization of foreign investment The scale of foreign investment in Qingdao reached a new high in 2015. There were 763 new foreign investment projects in Qingdao, up 23.26% year-on-year. Contractual foreign investment reached US$8.274 billion, up 39.81% year-onyear. The foreign investment actually used was US$6.691 billion, up 10.02% yearon-year, accounting for 41% of the city’s total. Main features are as follows: 1 )  C O N T I N U O U S I M P R O V E M E N T O F F O R E I G N I N V E S T M E N T STRUCTURE

Qingdao made full use of the policies for comprehensive wealth management reform pilot zones to attract foreign financial institutions and equity investment enterprises. In 2015, Korea Development Bank, Development Bank of Singapore and ANZ Bank settled in Qingdao; progress was made in projects of Beta Field Group in Hong Kong SAR, ISP Wealth Center in Italy and DP Investment Company in the UK; and China Merchants Group Industrial Park, with a total investment of US$298 million, settled down. During the 12th Five-Year Plan period, eight foreign banks were introduced to Qingdao, 28 by the end of 2015, accounting for 75% of the total, along with seven equity investment enterprises and two micro-loan companies. Both the Bank of Qingdao and Port of Qingdao got listed in the Hong Kong Stock Exchange, raising more than US$600 million and US$400 million of funds, respectively. Haier Healthwise Holdings Limited and Sino–German Ecopark were listed in the Hong Kong SAR and Germany respectively. In 2015, 17 new foreign-invested financial leasing companies were approved for establishment with a contractual investment of US$740 million. The total number of foreign-invested financial leasing companies reached 45 in the

146  Development overview city, forming an initial agglomeration effect. In 2015, 36 foreign M&A projects were approved, with a transaction volume of US$210 million. During the 12th Five-Year Plan period, Qingdao approved 206 foreign M&A projects accumulatively. Specifically, Haier Group reached a strategic investment agreement with KKR, realizing foreign investment of US$518 million, and Alibaba held equity interest in Gooday Logistics and achieved foreign investment of US$250 million. The investment projects of Mapfre Insurance, 7–11, Toray Medical Co., Ltd., United Asia Finance Limited and Mitsubishi Heavy Industries Jieneng (Qingdao) Steam Turbine Co., Ltd. were all launched. By the end of 2015, 124 Fortune Global 500 companies invested in 224 projects in Qingdao. During the 12th FiveYear Plan period, the share of actual foreign investment in the service sector in Qingdao increased gradually, and the proportion of actual foreign investment in the three industries changed from 3.5: 52.8: 43.7 at the end of the 11th Five-Year Plan period to 3: 50: 47 at the end of the 12th Five-Year Plan period. 2 )  I N N O V A T I O N O N F O R E I G N I N V E S T M E N T M A N A G E M E N T S Y S T E M

Shandong actively replicated and promoted the experience of the China (Shanghai) Pilot Free Trade Zone in its reforms. It lifted restrictions on financial leasing companies to engage in commercial factoring business related to their main business, and establish foreign-funded credit investigation companies and joint-stock foreign investment companies, and canceled the requirement for minimum registered capital for the establishment of subsidiaries. The factoring business was permitted for nine foreign-invested financial leasing companies, and several foreign-invested credit investigation companies and joint-stock foreign investment companies are moving toward the launch of their investment companies. In accordance with the Circular of the Ministry of Commerce on Canceling Follow-up Procedures after the Confirmation and Approval of Encouraged Foreign-invested Enterprises, Qingdao collaborated with the customs authorities to compare, sum up and file taxfree equipment import for 186 encouraged foreign investment projects in the city, involving a total investment of US$5.48 billion. To strengthen post-event supervision over foreign enterprises, it explored the establishment of an enterprise credit information platform, and joined hands with authorities of finance, statistics and taxation to establish a database of the production and operation of foreign enterprises. According to the statistics of foreign enterprises in the Joint Report on Annual Investment and Business Operations of Foreign-invested Enterprises in 2015, the investment scale of existing foreign enterprises continuously expanded, with the total investment increased by 9.9% and the registered capital by 11.1%. The foreign-subscribed registered capital went up 10.1%, with the accumulative paid-in contributions to a single enterprise registering US$3.227 million. 3 )  C O N T I N U O U S I M P R O V E M E N T O F T H E B U S I N E S S E N V I R O N M E N T

The quality of services for foreign enterprises was improved in an all-round way by establishing a three-level linkage service system, improving the development

Regional investment analysis report 2015  147 environment of foreign-invested enterprises at city, district and sub-district (town) and economic park levels, thus realizing full coverage of all foreign enterprises. A “service ambassador” system and a contact and visit system for key foreign-invested enterprises were established under which government officials paid visits to more than 5,950 foreign-invested enterprises and solved through coordination more than 1,700 problems in connection with foreign exchange settlement, customs clearance, financing and employment in 2015. Also, it organized more than 400 activities covering foreign enterprise service training and bank-enterprise matchmaking. 4 )  F O R E I G N - I N V E S T E D E N T E R P R I S E S P L A Y E D A SIGNIFICANT ROLE IN PROMOTING ECONOMIC AND SOCIAL DEVELOPMENT

So far, Qingdao is home to more than 6,700 foreign enterprises in operation. By the end of the 12th Five-Year Plan period, foreign enterprises created half of Qingdao’s export value, a third of its industrial added value, a third of its tax revenue and a quarter of new employment, and their role in promoting sustainable economic and social development in Qingdao strengthened further. (2)  Overseas investment In 2015, all statistical indicators concerning foreign investment and economic cooperation of Qingdao reached a record high, showing a good trend of development. There were 185 overseas investment projects filed throughout the year, with contractual Chinese investment of US$3.3 billion, up 124.2% year-on-year, and actual Chinese investment of US$1.31 billion, up 21.2%. The contractual outward investment of new overseas projects stood at US$3.66 billion, an increase of 60.6%; and the turnover rose by 1.3% to US$3.64 billion. A total of 17,047 workers were dispatched for overseas labor cooperation, a rise of 30.1%. Main features are as follows: 1 )  H I G H G R O W T H O F I N V E S T M E N T I N B R I C O U N T R I E S

In 2015, Qingdao filed 87 investment projects in 23 BRI countries, with the contractual investment up by 141.4% to US$1.82 billion, accounting for 55.2% of the total. H&Shun International Holding Pte. Ltd. increased its investment by US$95 million, and Chinese investment totaled US$275 million. This was the largest investment by Qingdao in BRI countries. 2 )  S T R O N G G R O W T H I N O V E R S E A S I N V E S T M E N T I N T H E MANUFACTURING INDUSTRY

Qingdao filed 54 new manufacturing investment projects, 10 more than in the previous year. Chinese contractual investment was US$1.21 billion with an increase of 252.2%, representing 36.7% of the total and involving a number of

148  Development overview fields including rubber and plastic products, electronic appliances, textile and clothing and mechanical equipment, marking an accelerated pace in international capacity cooperation. Sailun (Vietnam) Co., Ltd. increased US$165 million of capital and China invested a total of US$260 million in tire production and rubber product R&D, making it the largest overseas investment project of Qingdao in manufacturing in 2015. 3 )  N E W B R E A K T H R O U G H S I N T H E C O O P E R A T I V E DEVELOPMENT OF OVERSEAS RESOURCES

Qingdao Ruichang Cotton Industrial Co., Ltd. invested US$30 million in China– Africa Cotton Development Limited, making it the second largest cotton enterprise in Zimbabwe. Zhongqi Holding Group Co., Ltd. invested US$90 million in Zhongqi Overseas (Cambodia) Co., Ltd., which is engaged in the development of forest resources. Qingdao Jurong Oceanic Fisheries Co., Ltd., Qingdao DeepSea Fisheries Co., Ltd., Qingdao Luhaifeng Investment Co., Ltd. and three other enterprises set up dedicated companies to acquire overseas fishery resources. 4 )  R A P I D G R O W T H I N F O R E I G N M & A I N V E S T M E N T

Qingdao Haier Co., Ltd. successively acquired Indonesian, Vietnamese and Japanese enterprises, and Qingdao Hisense Electronics Co., Ltd. acquired ­ Mexican and German enterprises. A total of 35 M&A investment projects were filed in 2015 and the Chinese investment involved was US$592 million, up 118.8% and 500.9% over the previous year respectively. 5 )  C O N T I N U O U S L Y E X P A N D I N G S C O P E O F O V E R S E A S PROJECT CONTRACTING

Qingdao had 199 overseas contracted projects under construction in 2015, 27 more than in the previous year. These involved many fields including housing construction, power, the petrochemical industry, transportation, water management projects, communications projects, industrial construction, manufacturing and processing facilities building, etc. SEPCOIII Electronic Power Construction Co., Ltd. signed two EPC contracts for new power projects with a total contract value of US$2.06 billion. Overseas project contracting expanded into the fields of surveying design services and investment operations. 6 )  N E W P R O G R E S S I N T H E D E V E L O P M E N T O F O V E R S E A S LABOR COOPERATION MARKETS

Norway, Finland and Poland became new partners of Qingdao for labor cooperation, and thus the total number of European partner countries increased to nine. Workers dispatched abroad mainly worked as chefs. Qingdao’s seamen dispatch enterprises sent 10,578 people abroad, representing 62.1% of the total

Regional investment analysis report 2015  149 and setting a new record. Preliminary results were achieved in the development of the middle and high-end labor markets. The year 2016 marks the beginning of the 13th Five-Year Plan period and the year of tackling deep-seated problems in structural reform. Qingdao will earnestly put into action the messages conveyed at the 18th National Congress and the third, fourth and fifth plenary sessions of the 18th Central Committee of the Communist Party of China, and conscientiously implement the work arrangement of the municipal Party committee and the municipal government. On the basis of the development concepts of innovation-driven, coordinated, green, open and shared development, it will focus on the implementation of the strategy to build itself into an international city in line with the national strategy of expanding opening-up and regional development, accelerate the construction of a new open economic system, and boost the two-way opening of “bringing in” and “going global” in an effort to make a good start in the 13th Five-Year Plan period. 12 Shenzhen The Silk Road Economic Belt and the 21st Century Maritime Silk Road together form a strategic initiative, the Belt and Road Initiative, for China to coordinate between domestic and international needs and to reach a new stage in all-round opening-up. Shenzhen faithfully acted on the requirements of the CPC Central Committee and President Xi Jinping, made plans and took actions to play a leading role in the opening-up of special economic zones within the framework of the BRI. Besides, it promoted the development of an open economy in all aspects, and made greater efforts to ensure that the city have its say in the realm of regional economic cooperation and have its influence in the international trade system, so that it can take the lead in the transformation from a large foreign trade market to a strong one of China. (1)  Policies issued by Shenzhen in line with the BRI In March 2015, the central government issued the Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road, and afterwards, the Shenzhen Municipal People’s Government fully mobilized the whole city to participate in the implementation of the BRI and proposed that Shenzhen should be a strategic hub within the framework of the BRI and a bridgehead of the 21st-Century Maritime Silk Road and made arrangements accordingly. After the Implementation Plan for Guangdong Province’s Participation in the Development of the Silk Road Economic Belt and the 21st Century Maritime Silk Road was issued in June 2015, Shenzhen promptly followed up and formulated the Economic and Trade Cooperation Plan and Foreign Affairs Work Plan for Participation in the BRI. On this basis, Shenzhen further compiled the Implementation Plan of Shenzhen to Vigorously Develop the Economy of the Greater

150  Development overview Bay Area and Actively Serve the Implementation of the Belt and Road Initiative and put forward various specific tasks and measures. (2)  Inward and outward investment of Shenzhen in 2015 1 )  U T I L I Z A T I O N O F F O R E I G N I N V E S T M E N T

In 2015, a total of 3,359 foreign-invested enterprises were set up in Shenzhen, an increase of 34.9% year-on-year; a total of US$25.595 billion of contractual investment was attracted, up 134.92% year-on-year; and the foreign investment actually used was US$6.497 billion, up by 11.93% year-on-year. Shenzhen made new breakthroughs in terms of the volume and efficiency of foreign investment attraction. Modern services took a dominant position, while finance, leasing and business services, and manufacturing were all hotspots for foreign investment. In 2015, foreign investment in the service sector increased by 146.67% year-on-year to US$24.388 billion, accounting for 95.28% of the total, up 4.54 percentage points over the previous year. The actually used foreign investment was US$5.671 billion, an increase of 24.52% year-on-year or up 8.83 percentage points over 2014, making up 87.28% of the total. The top three industries to absorb contractual foreign investment were finance (US$11.711 billion, up 131.51% year-on-year), leasing and business services (US$3.951 billion, up 151.13% year-on-year), and real estate (US$2.863 billion, up 1,556.99% year-on-year). Foreign investment in the manufacturing industry went up 25.7% year-on-year to US$1.12 billion, with US$815 million actually used, down 26.82% year-on-year. In 2015, there were 473 projects with a contractual foreign investment of over US$10 million in Shenzhen, an increase of 195 over 2014, and US$22.828 billion worth of contractual investment was brought in, representing about 90% of the total and realizing a year-on-year growth of 181.5%. In December, there were four enterprises involving contractual investment of more than US$100 million, i.e., Shenzhen Wal-Mart Stores Retail Co., Ltd. (equity transfer on premium, contractual investment of US$402 million), Youli International F ­ inancial Leasing (Shenzhen) Co., Ltd. (newly established, US$200 million). Shenzhen Yuanjing Financial Leasing Co., Ltd. (capital increase, US$190 million) and Powerise Information Technology Co., Ltd. (M&A, US$155 million).

2 )  O V E R S E A S I N V E S T M E N T

In 2015, Shenzhen enterprises directly invested in and established 1,180 enterprises (institutions) overseas as approved by and filed with the Shenzhen Municipal People’s Government, with the total contractual investment of US$56.63 billion, an increase of 884.06% over the previous year, including US$204.06 billion of contractual investment from the Chinese side, up 286.70% year-onyear. Specifically, Qianhai enterprises invested in and set up 153 enterprises (institutions) with a total investment of US$3.711 billion from the Chinese side.

Regional investment analysis report 2015  151 According to data from the Ministry of Commerce, the actual outward investment of Shenzhen in 2015 was US$5.127 billion, up 28.9% year-on-year, accounting for 48.16% of the total of Guangdong Province and 6.54% of the national total. i)  Investment destination countries and regions. In 2015, Shenzhen enterprises established 910 enterprises (institutions) with direct investment in the Hong Kong SAR as approved by and filed with Shenzhen Municipal People’s Government. Endowed with fully open and highly international business platform advantages, unique geographical location and business environment, the Hong Kong SAR has become the first choice for Shenzhen enterprises to go global, ranking first among all countries (regions) in terms of the amount of OFDI from Shenzhen and receiving 77.19% of the total outward investment from Shenzhen, down 18 percentage points from the previous year. The total investment was US$31.940 billion, 56.4% of the total outward investment of the city, up 679.99% from a year earlier, of which Chinese investment amounted to US$14.906 billion, representing 73.05% of the total, up 273.02% year-on-year. The United States ranked second. In 2015, Shenzhen enterprises set up 93 enterprises (institutions) with direct investment in the United States, accounting for 7.88% of the total. The total investment reached US$2.014 billion, making up 3.56% of the total in the same period, of which Chinese investment amounted to US$1,062 million, 5.20% of the total. Singapore, Japan, Thailand and the United Kingdom respectively welcomed 13, 10, 10 and 8 enterprises and institutions established with investment from Shenzhen. ii)  Major investment industries. In 2015, the OFDI from Shenzhen mainly went to the information transmission, software and information technology services, with Chinese investment of US$7.722 billion, accounting for 37.84% of the total and involving 168 enterprises. The wholesale and retail industries followed thereafter, with Chinese investment of US$4.152 billion, accounting for 20.35% of the total in the same period and involving 583 enterprises. The rest were leasing and business services, real estate and manufacturing, with Chinese investment of US$2.277 billion (149), US$1.863 billion (27) and US$1.395 billion (110), respectively. 3 )  P R O B L E M S

In respect to the utilization of foreign capital, the quality still needs to be improved. Foreign investment mainly come from a limited number of sources, goes to just a few industries, via limited ways. Little investment actually goes to emerging industries. In terms of outward investment, Shenzhen has weak competitiveness for ­overseas investment and cooperation and has not participated much in the implementation of the BRI. Due to its weak ability to control the international market, it has not yet developed an international marketing network and, therefore, could hardly compete for scarce foreign technologies and resources.

152  Development overview (3)  Investment in and from BRI countries in 2015 1 )  I N V E S T M E N T F R O M B R I C O U N T R I E S

In 2015, 30 out of the 64 BRI countries invested in Shenzhen: 147 projects were newly launched, a year-on-year increase of 56, attracting US$100 million of contractual foreign investment, a year-on-year decline of 22.78%. Singapore and Malaysia were the top sources, with 48 new projects and 26 new projects, respectively. The investment was mainly directed to Shenzhen Dahuitian International Financial Leasing Co., Ltd. (US$32.6818 million) and Shenzhen Zhonglin Financial Leasing Co., Ltd. (US$30 million). 2 )  O F D I I N B R I C O U N T R I E S

In 2015, Shenzhen enterprises set up 66 enterprises (institutions) with direct investment in BRI countries, 5.59% of the total and up by 120% year-on-year. The total investment registered US$1.804 billion, accounting for 3.19% of the total and rising 470.89% over the previous year. Chinese investment saw a yearon-year growth of 900% to US$1.380 billion, accounting for 6.76% of the total. The real estate industry took a dominating position with Chinese investment of US$430 million (5 enterprises); the investment was mainly made in Singapore and Cambodia, with Chinese investment of US$139 million (11 enterprises) and US$431 million (5 enterprises) respectively. (4)  Characteristics of inward and outward investment 1 )  R I S E I N B O T H Q U A N T I T Y A N D Q U A L I T Y O F F D I

During the 12th Five-Year Plan period, Shenzhen made new breakthroughs in attracting foreign investment in terms of both quantity and quality. In terms of investment scale, the foreign investment actually used in Shenzhen increased from US$4.599 billion in 2011 to US$6.497 billion in 2015, an increase of about 1.41 times or an average annual growth of 8.6%. In terms of structure, modern services took the lead in absorbing foreign capital and equity investment, financial leasing, commercial factoring and management consulting were also popular fields attractive to investors. Of the existing foreign investment, 44.05% was invested in 8,254 enterprises in the secondary industry, 55.58% in 11,943 enterprises in the tertiary industry, and 0.4% in the primary industry. 2 )  I N C R E A S I N G L Y R A P I D G R O W T H I N O V E R S E A S I N V E S T M E N T

The outward investment of Shenzhen enterprises constantly increased and expanded, and the existing overseas investment projects grew significantly. By the end of 2015, 4,288 enterprises in Shenzhen had invested overseas to establish 4,934 overseas enterprises/institutions (4,710 enterprises, 224 institutions). The total contractual investment was US$73.653 billion, of which Chinese investment amounted to US$35.388 billion, ranking first among all Chinese

Regional investment analysis report 2015  153 cities. The investment forms were increasingly diversified, developing from a focus on sales outlets to equal prominence of production, services, R&D, resource development, capital operation and so on. At present, such enterprises as Huawei, ZTE, Tencent, CMHIT, CGNPC, CIMC, BYD, DJ-Innovations and Amer have greatly enhanced their status and competitiveness in their respective industries through deep integration of domestic and overseas resources and efficient allocation of factors. As a result, they have been industrial leaders and successful models of multinational operations. With rapid development in overseas project contracting and labor cooperation, the city saw an amount of overseas contracted projects of approximately US$20 billion, ranking first among large and medium-sized cities. Shenzhen enterprises’ investment in information and communications projects covered more than 100 countries and regions and led hundreds of domestic subcontractors and suppliers abroad. (5)  Prospects for 2016 During the 13th Five-Year Plan period, Shenzhen will actively implement the BRI, continuously promote the development of inward and outward investment and gradually boost the development of an open economy. It will pay full attention to improving the “bringing in” structure, constantly increase the proportion of R&D and high-end manufacturing investment of transnational corporations, and make better use of foreign investment in service industry. Active moves will be made to increase the proportion of foreign investment in strategic emerging industries, vigorously expand the scale of foreign investment from developed regions such as Europe, the United States and Japan, and significantly enhance the comprehensive contributions of foreign investment to the economic and social development of Shenzhen. While working hard to implement the going-global strategy, Shenzhen will seek to expand its development space, enhance its capability of transnational operation, expand the global influence of Made in Shenzhen products and build a whole raft of multinational companies with global resource allocation capabilities and influence along international value chains. 1 )  U T I L I Z A T I O N O F F O R E I G N I N V E S T M E N T I N A M O R E ACTIVE AND EFFECTIVE WAY

i) Stabilizing the scale of foreign investment utilization. Shenzhen will maintain stable, transparent and predictable foreign investment policies, and encourage the existing foreign-invested enterprises to increase their R&D investment, and gradually get itself into a higher position in the industry chain by creating brands, expanding domestic sales and smart production. It will enhance its ability to provide support for key industrial products, encourage foreign-invested enterprises to increase procurement from within China, and realize clustered industrial development. ii)  Expanding market access of foreign investment. Shenzhen will work to improve the source structure and industrial structure of its foreign investment utilization and

154  Development overview increase foreign investment. To this end, it will promote the orderly opening-up of the service sector, including finance, education, culture and health, lift restrictions on market access for foreign investment in the service sector such as childcare and elderly care, architectural design, accounting and auditing, trade and logistics, and e-commerce, and further liberalize the general manufacturing industry. It will encourage foreign investors to invest in modern agriculture, high and new technology, advanced manufacturing, energy conservation and environmental protection, new energy and modern service industries and to undertake the transfer of high-end industries. It will encourage and guide the establishment of R&D centers and regional headquarters by foreign-invested enterprises in the city so as to realize the synchronous attraction of investment, technology and intelligence, and provide support for the implementation of the innovation-driven development strategy. iii) Introducing representative transnational corporations to Shenzhen. In line with the requirements for building a modern industrial system, Shenzhen will place greater emphasis on promoting investment from key multinational companies in the world and leading enterprises in various industries, and encourage the launch of a number of large high-tech projects in advanced industries that can prompt more foreign investment. The focus will mainly be laid on the introduction of foreign investment from advanced manufacturing industries such as CNC machine tools, smart manufacturing and additive printing, from production service industries like e-commerce, service outsourcing and R&D design, from high-tech industries such as computer and communications equipment, semiconductors and spare parts and key manufacturing links such as industrial software, integrated circuits and display panel, and from strategic emerging industries such as new materials, new energy, biomedicine, and new-generation information technology. iv)  Establishing a foreign investment management mechanism in line with international norms. Guided by a mostly filing-based management system for foreign investment, Shenzhen will delegate power for project approval, strengthen supervision during and after project implementation, and explore to establish a reporting system for major matters concerning foreign investors. It will establish a foreign investment information-sharing platform and an inter-departmental joint working mechanism to build an open and transparent market competition environment. With these efforts, it hopes to realize pre-establishment national treatment plus negative list management within the framework of relevant national policies. 2 )  S P E E D I N G U P G O I N G - G L O B A L

i) Supporting enterprises to pool and allocate global resources. Eligible enterprises are encouraged to allocate global resources, energy, technology and talents through various investment and cooperation methods such as the establishment of new facilities, M&A, and project contracting. Shenzhen will encourage technologyintensive enterprises to make use of advanced foreign technological and intellectual resources to set up overseas testing centers and R&D bases, and improve their integrated innovation capability. It will support enterprises in establishing long-term

Regional investment analysis report 2015  155 and stable resource allocation bases in key areas such as Southeast Asia, South Pacific, Africa and the Middle East according to market demands. ii) Encouraging enterprises to participate in the formulation of international standards. Enterprises will be encouraged to actively join in international standard organizations (International Organization for Standardization, International Electrotechnical Commission, International Telecommunication Union, etc.) and participate in the formulation of international industrial standards (for electronics and electricians, semiconductors, new energy, new materials, etc.). Support will be given to the institutions that serve as members of international standard organizations to encourage them to play an active role in the development of international technical standards and price standards. iii)  Making great efforts in overseas project contracting. Shenzhen will encourage enterprises to make use of their own advantages in industries, technologies, talents and financial resources to participate in bidding for high-tech international projects regarding communications, environmental protection and smart cities and subcontracting of overseas projects. It will make great efforts to develop international design, software system integration and consulting services, and support enterprises to undertake technology- and capital-intensive overseas projects. It will make active moves to push forward international infrastructure cooperation and encourage enterprises to actively participate in overseas projects of telecommunications, power, port and infrastructure building. iv)  Effectively advancing the construction of overseas cooperation zones. Shenzhen will take industrial park construction as a leverage to accelerate the goingglobal of enterprises in clusters. It will promote the construction of the China– Vietnam (Shenzhen–Haiphong) Economic and Trade Cooperation Park, and support China Merchants, Yantian Port, CIMC and other advantageous enterprises to plan and build a number of port-centered logistics parks and industrial parks in key cities along the Maritime Silk Road. Qualified enterprises will be supported to jointly construct economic and trade cooperation zones or industrial parks in major cities in Indonesia, Thailand and Cambodia and build overseas ­processing and manufacturing, commercial and logistics bases for Shenzhen enterprises so as to transfer high-quality excess capacity and promote international capacity cooperation. Furthermore, Shenzhen will encourage industrial park development and operation enterprises to go global and invest in the construction of factories in BRI countries, and thus export their park operation and management models. It will further bring into play the role of trade associations and set up industrial cooperation platforms to guide enterprises to well-managed and well-supported overseas industrial parks, and thus enhance the enterprises’ capacity to form clusters for development and investment. v) Vigorously promoting international R&D cooperation. Shenzhen will promote the cooperative development in biotechnology, new energy, new space

156  Development overview carriers, marine products and other fields, so as to realize the integrated development of innovation chain and industry chain. Enterprises will be encouraged to make full use of overseas technological resources and personnel to establish overseas R&D centers in countries and regions with strong scientific and technological strength, and to acquire technological enterprises. Also, Shenzhen will work to spread Chinese technical specifications and standards through overseas operations of its enterprises in BRI countries and developing countries so as to expand the space for international development. vi)  Actively encouraging the export of services. Shenzhen will speed up overseas development of Internet services, e-commerce and online games industries. For advantageous industry chains such as information communications, biomedicine, smart manufacturing and software development, it will encourage e­ nterprises to take part in overseas governmental, corporate and civil facility construction and services projects by means of undertaking system integration projects and providing well-rounded solutions. and thus spur the overall export of products, technologies and services. Shenzhen will promote cooperation in professional services and cooperation with BRI countries in high-end services such as convention and exhibition, logistics, creative design, inspection and testing, tourism and culture, and will support the setup of business headquarters, marketing headquarters, R&D headquarters and fund settlement headquarters by enterprises in relevant countries. vii)  Building an all-round service support system. Shenzhen will adopt a filingbased management system for outward investment, and establish an accounting system for foreign investment and cooperation. It will improve the distribution of existing overseas offices and support the establishment of trade and investment promotion agencies in BRI countries and emerging markets like Indonesia, and Oceania countries like Papua New Guinea. It will study and establish a “GoingGlobal Strategic Alliance” and improve the going-global enterprises service system. It will improve the mechanism for managing loans for outward investment and cooperation and innovate in the model of financial support. It will study and compile guidelines for investment and cooperation in BRI countries, explore the establishment of government-led equity investment funds for going-global efforts, and join hands with China Export & Credit Insurance Corporation and other policy financial institutions to speed up the building of an early warning system for trade frictions, establish a risk guarantee mechanism for going-global enterprises and to provide better services in respect to operation monitoring, countryspecific risk assessment, early warning and emergency response. 3 )  T A K I N G T H E I N I T I A T I V E T O P A R T I C I P A T E I N B R I IMPLEMENTATION

i) Pushing forward infrastructure development and promoting connection and intercommunication. Shenzhen will comprehensively deploy logistics offices for BRI countries by connecting itself into the traffic network of these countries, and

Regional investment analysis report 2015  157 will build fast and efficient air and sea transportation channels connecting Southeast Asia, Northeast Asia and South Asia to form an integrated transportation system. It will participate in the construction of key ports and jointly construct port-centered industrial parks. Leveraging on its industrial advantages, Shenzhen will deeply engage in the development of a national Information Silk Road to promote information-sharing. In addition, it will actively participate in the formulation and revision of international, national and industrial standards, and promote the connection and alignment of technical standard systems in BRI countries. ii) Developing close economic and trade ties and facilitating trade financing. Shenzhen will put into actions a special plan for exploring emerging markets and moving into the markets of BRI countries, actively take part in the upgrading the China–ASEAN Free Trade Area, and dig deep into the market potential of Southeast Asian countries and the Bangladesh–China–India–Myanmar (BCIM) Economic Corridor. Actions will be taken to step up cooperation with the Republic of Korea, Australia, New Zealand, Papua New Guinea and other countries, as well as economic and trade cooperation with South and North America. It will also strive to explore Pakistan and other emerging markets, and to get actively involved in the building of the Guangdong–Xinjiang–Europe International Channel. Relying on the multi-party cooperation mechanism of the Silk Road, Shenzhen will build a high-standard comprehensive economic and trade promotion platform, and devote great efforts to constructing the China (Shenzhen)–Vietnam (Haiphong) Economic and Trade Zone and other cooperation zones. Advantageous enterprises will be sustained to develop markets in BRI countries, and go global to establish marketing networks, production bases and regional headquarters. Additionally, efforts will be made to strengthen competitive export advantages, accelerate the development of new trade methods, and raise the relative position of Shenzhen in the global value chain. iii)  Strengthening cross-border cooperation to secure financing. Relying on the resource allocation capacity of both itself and the Hong Kong SAR, Shenzhen will improve financial services and build financing platforms. It will carry out multilateral financial cooperation, support high-quality enterprises to raise funds abroad, guide financing guarantee agencies to serve small and medium-sized foreign trade enterprises and private enterprises, and guide commercial equity investment funds and private funds to jointly participate in key BRI projects. It will try hard to attract financial institutions, sovereign funds and investment funds in BRI countries to settle in the city, and vigorously develop trade and financial business. It will strengthen cross-border investment cooperation, take advantage of the favorable conditions brought by the BRI and the “two corridors and one circle,” take an active part in the upgrading of the China–ASEAN Free Trade Area, and build a demonstration platform for overseas economic cooperation and development. iv) Improving industry chains and expanding cooperation space. Shenzhen will accelerate industrial integration and complementary development with BRI countries,

158  Development overview and build a new regional industrial cooperation system centered around brands, technologies, capital and management. It will encourage advantageous industries such as electronic information to launch capacity cooperation with ASEAN and other countries, strengthen cooperation in marine and offshore engineering and equipment industries, expand the development space of offshore fisheries, and actively participate in the development of national resources in the South China Sea. Enterprises will be encouraged to cooperate with BRI countries in energy and upstream areas, participate in the development of oil, gas and mineral resources, and increase the exports of energy, technology and equipment to and the imports of resources and agricultural products from BRI countries. The industrial cooperation with the Shen-Shan Special Cooperation Zone and Kashgar of Xinjiang will also be promoted to encourage chain transfer of enterprises and capacity. v)  Giving full play to the role of frameworks and platforms and strengthening people-to-people exchanges. Relying on the pilot free trade zones and the Qianhai Shenzhen–Hong Kong Modern Services Industry Cooperation Zone, Shenzhen will build large platforms for economic and cultural exchanges such as the BRI Special Pavilion at China (Shenzhen) ICIF, the Silk Road Special Zone at China Hi-Tech Fair and the Qianhai Cooperation Forum, comprehensively deepen cultural exchanges and cooperation with BRI countries, and enhance the international popularity of the city. The city will get actively engaged in international cultural activities mutually organized by China and the BRI countries, promote cultural exchange projects such as the International Friendship City Culture Week, and encourage the export of cultural products such as radio and television programs, films, press and publications, and education. It will strengthen tourism cooperation with BRI countries and develop special tourism routes along the Maritime Silk Road. It will improve the distribution of sister cities, actively develop amicable ties with BRI countries and their cities, and strengthen extensive friendship, close contact and normal interactions with Chinese and overseas Chinese people in BRI countries.

(II)  Central China 1 Shanxi Inward and outward investment is a mirror of the ability and level of a country to absorb international capital and to invest and export its capital to other places. It is also an important symbol of the openness and international development level of a country. With deepened economic globalization and regional economic integration, inward and outward investment has become an important choice for more and more countries to participate in the international division of labor and global cooperation and competition. The BRI is an important ­economic and diplomatic proposal made by China through which it seeks to adapt to new changes in the international economic pattern and the new trend of economic globalization and regional economic integration, as well as a strategic plan for China to build a new pattern for its opening-up on all fronts and to

Regional investment analysis report 2015  159 foster and develop new advantages. The CPC Central Committee and the State Council attach great importance to inward and outward investment in line with the BRI. The 13th Five-Year Plan proposed that “with the Belt and Road ­Initiative paving the way, we will give greater meaning to the notion of openingup, increase our level of openness, and coordinate efforts to strengthen strategic mutual trust, investment and trade cooperation, and cultural exchanges. We will channel energy into realizing mutually beneficial cooperation based on deeper integration and bringing about a new stage in China’s opening-up.” As an important place along the routes outlined in the BRI, Shanxi has taken a lot of positive measures to promote inward and outward investment, which has effectively advanced the transformation and development of Shanxi’s economy. (1)  Recent policies of Shanxi to promote inward and outward investment In order to fully and faithfully implement the Opinions of the CPC Central Committee and the State Council on Developing a New Open Economic ­ System, Shanxi has taken the expansion of opening-up across the board and the development of an open economy as a key point in the transformation of a resource-depleted economy and has firmly seized the strategic opportunities brought by the BRI to give strong support to enterprises going global and to take effective measures to “bring in.” A global low-carbon and environment-friendly open economy has been created and the province’s ability to build platforms for opening-up has been improved. In 2015, the Opinions of the People’s Government of Shanxi Province on Expanding Opening-up on All Fronts was issued, proposing that Shanxi should take the opening-up on all fronts by seizing the BRI opportunity as a priority, and clarified measures to create a publicity program called “Shanxi Brand Silk Road Tour” for its opening-up. It provides strong support for Shanxi to build the scale and quality of its open economy and form an all-round, wide-ranging, multi-leveled and high-quality new pattern for opening-up across the board. In September 2015, the Implementation Plan for Shanxi Province to Participate in the Implementation of the Silk Road Economic Belt and the 21stcentury Maritime Silk Road Initiative was issued, proposing that Shanxi should strive to make substantial progress in exchanges and cooperation between the province and other provinces, municipalities and autonomous regions of China as well as BRI countries and regions within three to five years. In order to push Shanxi enterprises to go global and carry out transnational operation, eight departments of the province, i.e., the Department of Commerce, the Development and Reform Commission, the Department of Industry and Information Technology, the Department of Finance, the Department of Agriculture and Rural Affairs, the Foreign Affairs Office, State-owned Assets Supervision and Administration Commission of Shanxi Provincial Government and the State Administration of Foreign Exchange Shanxi Branch jointly issued the Guiding Opinions on Encouraging Enterprises to Go Global and Conduct Transnational Operation (JSH [2013] No. 299). Since 2014, Shanxi has implemented

160  Development overview a paperless filing system for investment in non-sensitive countries, which has reduced the cost and burden of business operations and facilitated foreign investment activities. In 2016, the Implementation Plan for Promoting Cooperation in International Production Capacity and Equipment Manufacturing was issued, specifying that Shanxi should make greater efforts to push key advantageous industries like coal, coke, iron and steel, power and equipment manufacturing to go global by rolling out a series of support and service measures including investment facilitation reform, comprehensive information service and joint meeting mechanism of various departments. In 2016, Shanxi also issued the Implementation Rules for Promoting International Capacity Cooperation in Coal and Coke which has played a positive role in cutting excess coal and coking capacity and promoting international cooperation in this field. (2)  Inward and outward investment of Shanxi in 2015 1 )  G R O W T H I N T O T A L I N W A R D A N D O U T W A R D I N V E S T M E N T

In 2015, 36 enterprises (projects) were launched with foreign direct investment, down 28% year-on-year, and the actual FDI was US$2.87 billion, down 2.8%. In 2015, Shanxi enterprises signed contracts for overseas economic cooperation with a total value of US$350 million, an increase of 1.0%, and the turnover was US$740 million, down 0.3%. 2 )  I N W A R D A N D O U T W A R D I N V E S T M E N T S T R U C T U R E

In terms of industries, foreign investment in Shanxi mainly went to power (including thermal power generation and other energy generation), construction, animal husbandry, health, manufacturing (including machinery manufacturing and other manufacturing industries), warehousing, water supply and drainage (production and supply of tap water), wholesale of equipment products, professional consultation, software services, technical promotion, etc. See Table 2.9 for details. Foreign investment in Shanxi was mainly from the Hong Kong SAR, Taiwan of China, the Macao SAR, the Republic of Korea, Singapore, the United States, Canada, Germany, the British Virgin Islands, Samoa, Cameroon, Seychelles, etc. See Table 2.10 for details. Overseas investment of Shanxi mainly went to the United States, Canada, Australia, Malaysia and Kenya, involving manufacturing, catering, real estate, construction, wholesale and retail sales industries. Key projects included the M&A of hotels in Canada by Wufeng Construction Group Co., Ltd., the farm project of Shanxi Guangrun Yunfa Minerals Sales Co., Ltd. in the United States, and the construction project of Shanxi Construction Engineering (Group) Co., Ltd. in Malaysia. 3 )  P R O B L E M S I N I N W A R D A N D O U T W A R D I N V E S T M E N T

From the perspective of the utilization of foreign capital, the main problems are, first of all, information asymmetry and narrow channels for investment attraction. In

Regional investment analysis report 2015  161 Table 2.9  Distribution of foreign investment in Shanxi in 2015 Industry

Thermal power Other energy generation Construction Animal husbandry Health Machinery manufacturing Other manufacturing Tap water production and supply Warehousing Software service Wholesale of equipment products Professional consultation Technical promotion Others Total

Number of Proportion (%) Total investment Proportion (%) enterprises (US$100 million) (projects) 2 4

5.56 11.11

79,541.25 28,724.4241

38.28 13.82

2 1 1 7

5.56 2.78 2.78 19.44

35,964.06 29,000 9,000 2,413.8603

17.31 13.96 4.33 1.16

4 1

11.11 2.78

11,151.4307 4,904.19

5.37 2.36

2 3 1

5.56 8.33 2.78

3,855 1,691.6396 1,301.344

1.86 0.81 0.63

2

5.56

70.7817

0.03

2 4 36

5.56 11.09 100.00

60 123.6742 207,802

0.03 0.05 100.00

Table 2.10  Sources of foreign investment in Shanxi in 2015 Source

Number of Proportion enterprises (%) (projects)

Total investment (US$100 million)

Proportion (%)

Hong Kong SAR Singapore Investment company British Virgin Islands Seychelles Republic of Korea Germany Canada Samoa Italy Taiwan, China United States Cameroon Macao SAR Total

13 2 3 3 1 2 2 1 1 1 3 2 1 1 36

104,902.6197 73,611.25 15,994.6341 10,905.5571 1,301.344 299.9314 269.7785 244.212 85 78.1715 60.6536 18.7201 16.8852 12.8974 207,802

50.48 35.42 7.70 5.25 0.63 0.14 0.13 0.12 0.04 0.04 0.03 0.01 0.01 0.01 100

36.11 5.56 8.33 8.33 2.78 5.56 5.56 2.78 2.78 2.78 8.33 5.56 2.78 2.78 100

162  Development overview recent years, China has greatly reduced all kinds of investment attraction events, and the funds granted by local governments in this regard have been strictly restricted. Thus, enterprises obtain less and less information from the government over the years and social and non-governmental organizations failed to play their roles in this regard effectively. Moreover, the government has not put in place investment incentives and this caused enterprises to be less interested in investment attraction. The second problem is constraints on land and planning. The main reason for Shanxi’s poor performance in investment attraction can also be attributed to land and planning. Many projects cannot launch in the end because it turns out that it is hard to secure land, and to attract foreign investors to settle. Third, there is a lack of attraction to foreign investors, and a limited scope of industries open for foreign investment. As the province works to cut overcapacity, Shanxi has seen a downturn in its traditional coal and metallurgical industry, which in turn affected its supporting machinery industries like coal machinery, mining and smelting. It is urgent, therefore, to explore new industrial growth drivers. Fourth, small and few foreign investment projects in traditional industries can hardly drive economic development. There are also problems in outward investment: First, international talent cooperation and exchange still need to be strengthened, and there is a shortage in all kinds of interdisciplinary talents, professionals and skilled workers who are familiar with international economic and trade rules, especially capital operations rules. Second, the international operation ability of enterprises is weak, resulting in great overseas investment risk. In the process of international operation, some inexperienced Shanxi enterprises are subject to restrictions posed by policies, laws, administration, foreign exchange, labor and other factors, and likely to incur uncontrollable investment risks. 4 )  D E V E L O P M E N T T R E N D S A N D P R O S P E C T S F O R 2016

From the perspective of utilizing foreign capital, on the one hand, the Shanxi Provincial Party Committee and the Provincial People’s Government have put forward major ideas and requirements of “following one guide and making efforts in two aspects,” and will continue taking economic development as their central and primary task, which reflects their respect for history and their responsibility to the people. At present, an atmosphere for boosting economic development has been preliminarily formed across the province, laying a solid foundation for the utilization of foreign capital. On the other hand, Shanxi is facing prominent problems in the volume and structure of foreign investment, and has not found a sound way to boost development momentum. Therefore, its economy is still sluggish on the whole. New economic growth drivers suitable for its specific conditions have not come into being, and foreign enterprises and investors generally take a wait-and-see attitude. In general, opportunities and challenges coexist, while difficulties and hope go hand in hand. From the perspective of outward investment, first, Shanxi should speed up the development of an open economy and put a series of policies and measures into

Regional investment analysis report 2015  163 actions in a more effective way to encourage and support local enterprises to go global. Second, support should be given to large-scale enterprises to operate and cooperate in international markets, so as to extend the industry chain of enterprises and enhance their comprehensive strength. Third, Shanxi will give better play to its industrial advantages, and vigorously promote international capacity and equipment manufacturing cooperation in an effort to achieve good investment returns and build great reputation. (3)  Inward and outward investment of Shanxi in 2015 In an effort to contribute to the implementation of the BRI, China established the Asian Infrastructure Investment Bank and the Silk Road Fund, and international production capacity and equipment manufacturing cooperation has entered into the implementation stage. These provided new market opportunities for Shanxi enterprises in the mining industry, coal chemical industry, equipment manufacturing industry, as well as the province’s advantageous surplus capacity in power, metallurgy and other sectors to go global. 1 )  I N V E S T M E N T F R O M B R I C O U N T R I E S

In 2015, the total investment in Shanxi from BRI countries was small and involved only a few countries and industries. In terms of quantity, there were only two enterprises (projects) with foreign investment from Singapore, namely Shanxi Luguang Power Co., Ltd., which belongs to the thermal power generation industry and received a total investment of US$735.4125 million, and Fuerteng (Shanxi) Enterprise Consulting Co., Ltd., which engages in professional consulting and received a total investment of US$700,000. The total investment in these two enterprises (projects) accounted for 35.42% of the total in Shanxi Province. 2 )  I N V E S T M E N T I N B R I C O U N T R I E S

Shanxi enterprises reported 86 overseas investment projects in BRI countries, 84 of which actually completed investment. The total amount was US$464 million and the projects were in 24 BRI countries, including Russia, Mongolia, Kazakhstan, Kyrgyzstan, Tajikistan, Singapore, Vietnam, Thailand, Malaysia, the Philippines, Indonesia, Myanmar and Sri Lanka, and the fields of mining, construction, equipment manufacturing, chemical, wholesale and retail sales. In the first half of 2016, nine enterprises in Shanxi invested a total of US$75.92 million in BRI countries, representing 71.66% of the total, in machinery manufacturing, coal mining, medicine, real estate, printing and other industries in Singapore, Mongolia, Pakistan, Georgia, Turkey, India and Indonesia. A typical project is the project of CRRC Yongji Electric Co., Ltd. (herein­ after referred to as “Yongji Electric”) in India. Since entering the Indian railway market in 2008, Yongji Electric has gradually developed from a primary supplier

164  Development overview of electric motors to a batch supplier. Up to now, it has obtained sales contracts of 60 main generators and more than 1,100 traction motors in the Indian market. The company has invested to form a joint venture, i.e., CNR Pioneer Electric Pvt Ltd. with CRRC Pioneer Electric (India) Pvt Ltd., and Yongji Electric holds 51% of the share while CRRC Pioneer holds 49%. It is registered in New Delhi, India, and its production base is located in the BAWAL Industrial Zone in Haryana State. 3 )  P R O S P E C T S F O R 2016

In 2016, with the advancement of the implementation of the BRI, Shanxi will seize the opportunities brought by the BRI and strive for progress on all fronts. On the one hand, it will innovate in institutions, develop pro-business awareness, improve administrative efficiency and service quality, and effectively utilize foreign capital. On the other hand, it will actively organize local enterprises to go global and actively negotiate with partners in BRI countries to further increase investment, improve investment structure and expand business scope. Actions will be taken in the following five aspects: First, the province will strengthen coordination with national strategies with an active and open attitude toward cooperation. Shanxi will change its concept and take active actions to get itself onto the BRI express train and the major projects it took part in into the project database of a series of policy banks and funds such as the Asian Infrastructure Investment Bank, the Silk Road Fund and the China Investment Bank. In addition, addressing the prominent problems affecting investment and development, Shanxi will innovate in mechanisms and improve policies, and on this basis, transform government functions and simplify approval requirements and procedures. It will make persistent efforts to improve the business environment, and strive to create a fair market environment, a fair legal environment for merchants, a stable policy environment and an efficient service environment for the purpose of better attracting and utilizing foreign government loans. Second, it will promote the transfer of advantageous capacities. In accordance with the requirements of industrial restructuring, transformation and upgrading and in an effort to cut overcapacity, key coal enterprises, Shanxi Taigang Stainless Steel Co., Ltd., Taiyuan Heavy Machinery Group Co., Ltd. and Shanxi Construction Engineering Group Co., Ltd., among others, will be organized to actively participate in promotion and matchmaking activities of Shanxi Province in a number of BRI countries. An emphasis will be laid on the transfer of advantageous capacities in industries like iron and steel, coal machinery manufacturing and coal mining to other countries and regions by establishing overseas production and processing bases in a bid to help enterprises to go global, advantageous capacities to move abroad and technical standards to enter the international market. Third, the province will explore and implement the strategy of going global in clusters. Shanxi will strengthen information exchange for overseas cooperation

Regional investment analysis report 2015  165 among enterprises and realize resource-sharing. By giving full play to the leading role of major enterprises, Shanxi will attract enterprises in the upstream and downstream of relevant industry chains to transfer related capacities and form a better coordinated layout, support enterprises to set up R&D, production and marketing systems abroad, and enhance the province’s industrial supporting capacity and comprehensive competitiveness. It will combine resource development with infrastructure construction, and project contracting with construction and operation, probe into the model that puts together resources, projects and financing, so as to maximize comprehensive investment returns. Fourth, the province will join hands with central enterprises for going global. While further deepening cooperation with state-owned enterprises, Shanxi will call on local enterprises to make full use of the cooperation platforms such as Campaign of Central Enterprises in Shanxi and the CIEI EXPO, and leverage the advantages of central enterprises in project, capital, technology, experience and management to carry out cooperation with them in various forms such as through stock participation and investment. In this way, Shanxi will be able to obtain subcontracts from general contractors, and enhance international operation of local enterprises through cooperation with central enterprises so as to accomplish the goal of effectively forestalling and defusing overseas investment risks. Fifth, Shanxi will further build BRI communication and cooperation ­platforms. Shanxi will continue to implement the annual action plan of “Shanxi Brand Silk Road Tour” and establish the program as a new calling card of the province in its opening-up and a way to participate in the implementation of the BRI. In the meantime, focusing on the theme of “green development of black coal and low-carbon utilization of rich carbon resources,” Shanxi will make good use of its coal resources and take solid steps to form partnerships with other major coal-producing regions and cities in the world, step up cooperation with the BRI countries and thus advance its economic transformation and development. 2 Anhui (1)  Recent policies of Anhui to promote inward and outward investment These policies mainly include the Implementation Plan for Anhui Province to Participate in the Development of the Silk Road Economic Belt and the 21st Century Maritime Silk Road, the Implementation Opinions on Promoting International Capacity and Equipment Manufacturing Cooperation in Anhui ­ Province, the Guiding Opinions of General Office of Anhui Provincial People’s Government on Supporting Enterprises to Go Global for Transnational Business, the Administrative Measures for the Approval and Filing of Foreign Investment Projects in Anhui Province and the Administrative Measures for the Approval and Filing of Overseas Investment Projects of Anhui Province, etc.

166  Development overview (2)  Inward and outward investment of Anhui in 2015 1 )  U T I L I Z A T I O N O F F O R E I G N I N V E S T M E N T

In 2015, Anhui actually utilized US$13.62 billion of foreign direct investment, accounting for 10.8% of the total of China, 0.5 percentage point higher than in 2014. It maintained a relatively high growth rate of 10.4%, 5.1 percentage points lower than in 2014, but 5 percentage points higher than the national average. i)  Strong growth in foreign investment in the manufacturing industry. The proportion of foreign capital utilized by the primary, secondary, and tertiary ­industries in Anhui was respectively 2%, 59% and 39% of the total. The secondary industry used US$8.02 billion, an increase of 26.1%. This included US$2.73 billion in strategic emerging industries, up by 27.5% and accounting for 20.1% of the province’s total, up 2.7 percentage points over 2014. The tertiary industry used US$5.34 billion, a drop of 5.9%, US$340 million less than 2014. US$320 million of this was utilized by the real estate industry, down 10.4% or US$380 million less than in 2015. This is the main reason for the decline in foreign capital utilization by the tertiary industry as a whole. ii)  Fast growth in foreign investment in Wanjiang Demonstration Area. Up to 14 cities with districts within their jurisdiction in Anhui Province saw a year-on-year growth in their utilization of foreign capital. The foreign investment utilized by Hefei, Wuhu, Ma’anshan, Bengbu and Chuzhou (for the first time) all exceeded US$1 billion. Xuancheng utilized US$800 million of foreign capital, an increase of 15.4%, the highest growth in the province. The actual foreign investment in the Wanjiang Demonstration Area accounted for 70% of the province’s total and reached US$9.53 billion, an increase of 12.3%. The six cities in northern Anhui utilized a total of US$3.72 billion of foreign capital, a rise of 12.4% over the previous year. The foreign investment utilized by counties in Anhui amounted to US$5.16 billion, up 12.9%; foreign investment utilized by development zones at or above the provincial level reached US$7.92 billion, up 17.2%. iii)  Rapid growth in investment from America and Europe. Large investment of over US$500 million mainly came from: the Hong Kong SAR (US$7.66 billion, 56.2% of the total, down 0.3%, which was the first negative growth ever); the British Virgin Islands (US$910 million, up 71.2%); the United States (US$810 million, up 18.3%); Taiwan of China (US$760 million, down 6.8%); Japan (US$600 million, up 11.3%); and Europe (US$1.34 billion, up 56.7%). The sharp rise in investment from Europe was mostly the result of increases in investment from Italy, the United Kingdom, France and Ireland. iv) Increase in new foreign investment projects. There were 289 new foreign investment projects, with a contractual investment of US$3.94 billion, an increase of 12.9% and 26.6% respectively. The average investment amount of each project was US$13.63 million, up 12.2%. Specifically, there were 70 projects

Regional investment analysis report 2015  167 over US$10 million in contractual investment, making a total of US$2.26 billion, an increase of 6.1% and 26% respectively over the previous year. Fortune Global 500 enterprises like Samsung of the Republic of Korea and Bosch of Germany set up seven enterprises in Anhui in 2015, and accumulatively, a total of 72 Fortune Global 500 enterprises had invested to set up 120 enterprises in Anhui. 2 )  O V E R S E A S I N V E S T M E N T

In 2015, the actual outward investment of Anhui enterprises stood at US$970 million, an increase of 1.1 times. There were 133 newly approved overseas investment enterprises with an agreed outward investment of US$2.82 billion, up 33% and 56% respectively. Regardless of great fluctuations in overseas investment, the overall trend is positive. i)  Effective promotion of international capacity cooperation. Enterprises in the fields of building materials, automobiles, agriculture and mineral resources development accelerated their pace in international capacity cooperation. To be specific, Anhui Conch Group Co., Ltd. invested more than US$400 million in Southeast Asia, and had projects under construction in Indonesia’s South Kalimantan Island, Pelabuhan Merak, and West Papua and Kyaukesh of Myanmar. CRCC-Tongguan Investment Co., Ltd. invested US$1.7 billion in a copper project in Ecuador. Chery invested US$300 million in a car project in Brazil, which had been completed and put into operation. Throughout the year, Anhui enterprises signed contracts for 46 projects over US$10 million in value each with BRI countries and the contractual investment amounted to US$2.97 billion, up by 15% and 26.1% respectively. ii)  Rapid development in cross-border M&A. Efort Intelligent Equipment Co., Ltd. intends to acquire 70% equity of Italy’s CMA, which is the world’s first supplier of self-learning spraying robots. Anhui Zhongding Sealing Parts Co., Ltd. intends to acquire 100% equity of Germany’s WEGU, whose seismic and noise reduction technology is top in the world. Guochuang Software Co., Ltd. intends to set up a wholly-owned subsidiary in Tokyo, Japan, for system design, software development and sales. iii) Deepening cooperation with key countries. Relying on the cooperation mechanism between the upper and middle reaches of the Yangtze River and the Federal Region along the Volga River of Russia, Anhui sought cooperation with Russian partners in many areas, maintained direct contact with 12 entities along the Volga River, and established friendly ties with Nizhny Novgorod Oblast. The two sides paid 181 mutual visits and signed 41 cooperation agreements including that for the investment project of Anhui Conch Group Co., Ltd. in Ulyanovsk. During the visit of the Chinese Premier and German Prime Minister to Anhui, eight important cooperation agreements were signed, under which the two sides would actively promote cooperation in the fields of economy, trade,

168  Development overview finance, science and education, urbanization, agriculture, tourism and culture. There are 55 key projects in the fields of automobile, equipment manufacturing, chemical, science, education and culture in the project database for cooperation between Anhui and Germany. 3 )  P R O B L E M S

In 2015, though some achievements were made in the utilization of foreign capital and overseas investment, Anhui still had some difficulties and problems. First, there was weak driving force arising from big foreign investment projects. By the end of 2015, only 71 Fortune Global 500 enterprises were present in Anhui, while there were 219 in Sichuan, 167 in Hubei and 84 in Henan. Second, the structure of foreign investment in the service sector needs to be improved. In 2014, the growth in the foreign investment utilized by the service sector reached 87.7%, yet it was –5.9% in 2015. The main reason is that the structure of foreign investment utilization in the service sector was unreasonable with excessive dependence on real estate. Trade and social public services saw rapid growth of foreign investment but the total amount remained low. Third, the business environment was poor in some of Anhui’s target countries for overseas investment. Some factors such as an unstable political situation, imperfect legal system and changing policies in some countries and regions of Africa and South America affected the implementation of some projects. Fourth, strong market players were lacking. On the one hand, the province was short of strong large enterprises, advanced technologies and industries, making it difficult for it to undertake large foreign investment projects. On the other hand, Anhui remained dependent on several large enterprises and large projects for overseas investment. Fifth, the overall economic environment was not very good. The global economic downturn, downward pressure at home, and a variety of production and management pressures faced by many domestic and foreign enterprises led to a decline in investment intention and a slowed pace of development. 4 )  P R O S P E C T S F O R 2016

At present, Anhui is still in a stage of rapid development of new industrialization, urbanization, informatization and agricultural modernization, cradling huge potential domestic demand. China has accelerated the implementation of the “three major strategies” for regional development, which is conducive to the all-round opening-up of Anhui. Therefore, Anhui is currently in a golden period of development. At the same time, it must be seen that the world economy will continue with weak recovery, and the trend in major economies diverges, causing great uncertainty and instability. International relations are unprecedentedly complex, and the external demand is shrinking. The year 2016 is the beginning of our battle to secure a decisive victory in building a moderately prosperous society in all respects and the year of tackling the difficulty in comprehensively implementing the Action Plan for Adjusting Structure, Changing Modes and Promoting Upgrading. Under the new situation of opening-up, Anhui should seize the opportunity,

Regional investment analysis report 2015  169 build up internal strength and step up its efforts to encourage innovation. To overcome the difficulties, it should focus on the following tasks. First, Anhui should earnestly carry out research on foreign capital utilization and overseas investment, and work out its 13th five-year plan for foreign investment. Second, while fully and faithfully implementing the BRI, the province should actively promote international capacity cooperation and build a new pattern of opening-up. Third, Anhui should work hard to accelerate the establishment of a new open economic system, further eliminate institutional obstacles, actively explore new models, new paths and new systems for overseas economic cooperation, and work harder to build new advantages in international cooperation and competition. Fourth, it should explore and study the management model of pre-establishment national treatment plus a negative list, and actively promote the experience of the China (Shanghai) Pilot Free Trade Zone. Fifth, it should get ­actively involved in industrial transfer and division of labor and cooperation in the Yangtze River Economic Belt, and attract foreign investment to strategic emerging industries and modern service industries. Sixth, it should strengthen macro-guidance and services for overseas investment activities, actively promote Anhui–Russia and Anhui–Germany cooperation, and support enterprises to issue bonds abroad and make use of international commercial loans. (3)  Investment in and from BRI countries in 2015 1 )  I N W A R D A N D O U T W A R D I N V E S T M E N T

In 2015, the investment cooperation between Anhui and BRI countries was further strengthened. The province attracted US$710 million of investment from BRI countries, an increase of 13.3%, and made US$400 million of investment in BRI countries, an increase of 5.7 times. Contracts were signed for 46 new projects over US$10 million in value with partners in BRI countries, with a total contractual outward investment of US$2.97 billion, up 15% and 26.1% respectively. 2 )  M A J O R E N T E R P R I S E S A N D P R O J E C T S

At present, large and influential Anhui enterprises in the going-global campaign are Tongling Nonferrous Metals Group Holdings Co., Ltd., which is working on a copper project in Mirador, Ecuador, the project of Canadian Zinc Corporation, and a copper mine project in Rio Blanco, Peru; Anhui Yanzhuang Oil Co., Ltd., which established AY International Trade Company in Uganda and Tanzania in Africa, a joint venture with AHCO Group; Anhui Nongken Group Co., Ltd., which is pushing forward a 50-hectare integrated land agriculture development project in Zimbabwe; JAC Motors, which established JAC Motors do Brasil Automoveis S.A in Camarsal, Iya, Brazil in cooperation with foreign partners; Anhui Foreign Economic Construction (Group) Co., Ltd., which is actively advancing a titanium and zirconium project in Mozambique and a cement plant project with a daily output of 3,000 tons in Sverdlovskaya Oblast, Russia; BBCA Group, which has launched a citric acid project with an annual output of 60,000 tons in Hungary;

170  Development overview Anhui Construction Engineering Group Co., Ltd., which has won the bid for the Kenya international airport project together with CATIC International Engineering Corporation; Ma Steel Group, which has newly launched a project of 60,000 forged wheels in cooperation with Naledi of South Africa. In view of the fact that public facilities are generally weak in BRI countries and that Chinese products and technologies are needed in the process of their infrastructure construction and economic development, Anhui Conch Group, with its funds and technologies, worked to expand the export of large equipment, general contracting of projects, the export of products and labor and other related businesses overseas while investing in cement projects. At present, it has finished investment survey and planning in Indonesia, Myanmar, Cambodia, Laos and other neighboring countries in Southeast Asia. Among them, its first production line in Kalimantan Selatan, Indonesia has been put into operation, and the second is under construction. Its 5,000-ton-per-day production line project in ­Mandalay, Myanmar, has been commenced in cooperation with the Ministry of Industry of Myanmar. In Laos and Cambodia, it has just signed cooperation framework agreements with partners. At present, it has projects taking shape in Indonesia, Myanmar, Cambodia, Laos, and Russia, producing 37 million tons of clinker and 50.20 million tons of cement. It has also signed a letter of intent for cooperation with Lao partners to build the China–Laos expressway. 3 )  P R O S P E C T S F O R C O O P E R A T I O N

i) Highlighting the construction of key projects. In accordance with the requirements of the Circular on the Interim Measures for the Management of the Key Project Database under the Belt and Road Initiative, and in the principle of “launching a batch, keeping a batch in reserve, and making plans for a batch” of projects, Anhui will reserve a number of high-quality projects in areas such as infrastructure, trade and economic cooperation, industrial investment and people-to-people and cultural exchanges, and improve the BRI key project database of the province. It will establish and improve a standardized, institutionalized and regular project coordination and reporting mechanism to report in a timely way the progress of projects, existing problems and future plans. It will implement account management for key BRI projects and enter relevant information into the information management system for key BRI projects to ensure smooth project implementation. ii) In-depth international capacity cooperation. While seizing new opportunities for international economic cooperation, Anhui will target key countries to promote the combination of international capacity cooperation with Anhui’s “adjustment, change and promotion” campaign and foster new impetus for economic growth. It will clarify the tasks as proposed under the Implementation Opinions on Promoting International Capacity and Equipment Manufacturing Cooperation in Anhui Province as soon as possible and promote the international capacity cooperation with BRI countries in the fields of building materials, automobiles and spare parts, iron and steel, chemical industry, energy, construction

Regional investment analysis report 2015  171 machinery, light industry, textiles and agriculture. It will follow up on the cooperation between JAC Motors and Volkswagen, speed up the construction of the China–Germany Industrial Park, and promote the cement projects of Anhui Conch Group in Southeast Asian countries and Russia. It will implement the coordination mechanism between Anhui Provincial People’s Government and the National Development and Reform Commission for international capacity cooperation, actively seek support in terms of policies, funds and information, and take the lead in capacity cooperation with Indonesia, Brazil, Ecuador, Romania and Hungary. iii)  Promoting cooperation in the field of humanities. With a focus on education, culture, tourism, health, science and technology, environmental protection and other areas, Anhui will carry out multi-level and all-directional overseas cooperation and exchange. It will strengthen bilateral student exchange, introduce high-quality education and teaching resources from BRI countries, and jointly implement school projects. It will actively participate in the Silk Road Film Bridge Project and the Silk Road Book Project, and organize cultural festivals and art festivals jointly with BRI countries. It will strengthen tourism cooperation with BRI countries and encourage tourism enterprises to open up tourism markets in these countries. A long-term cooperation and exchange mechanism for medical and health care cooperation will be established for the purpose of strengthening cooperation with BRI countries in training medical and health personnel, communication on infectious diseases, and exchange of prevention and control techniques. The province will take an active part in China’s “Technology Partner Plan” so as to jointly tackle key scientific and technological problems, and promote the exchange of technical personnel. It will also make moves to boost cooperation with the BRI countries in environmental protection. iv)  Speeding up the construction of opening-up platforms. In addition to promoting the construction of international industrial cooperation parks such as the Chery Industrial Park in Brazil, the Anhui Nongken–Zimbabwe Economic and Trade Zone, and the Foreign Economic and Trade Cooperation Zone of Anhui Foreign Economic Construction (Group) Co., Ltd. in Beria, Mozambique, Anhui will actively apply for the establishment of national cooperation zones. It will speed up the construction of the Hefei and Wuhu Comprehensive Bonded Area and B-type bonded logistics centers in Bengbu (northern Anhui) and Anqing (southwestern Anhui), and build open platforms such as the Hefei Cross-Border E-Commerce Comprehensive Pilot Zone and the Wuhu National E-Commerce Demonstration City. Relying on the development of the Yangtze River Economic Belt and the cooperation mechanism for the Yangtze River Delta, Anhui will promote the establishment of an inter-departmental and cross-regional customs clearance and inspection collaboration mechanism, and integrate it into the customs clearance, inspection and quarantine system along the Yangtze River Economic Belt. Duplicable experience of the China (Shanghai) Pilot Free Trade Zone will be disseminated in Anhui in an effort to establish the Wanjiang Free Trade Zone.

172  Development overview v)  Building the capacity for financial services. Commercial banks will be guided in financial service innovation so that they can provide financing support to overseas projects by means of international commercial loans, export credit loans, overseas investment loans and offshore financing against domestic guarantee. In addition, Anhui will encourage its financial institutions to set up branches in key BRI countries in cooperation with Anhui to improve their capacity for the disposal of overseas assets, rights and interests. It will study and establish a provincial BRI development fund, and meanwhile, help enterprises compete for the support from the Silk Road Fund, China–Africa Development Fund, China–ASEAN Investment Cooperation Fund, CIC Offshore Fund, and other funding programs. Insurance institutions will be encouraged to engage in export credit insurance and overseas investment insurance in accordance with the law so as to provide insurance coverage so that risks remain controllable for all overseas investment projects. vi)  Strengthening overseas risk prevention and control. Guided by the Implementation Plan for Overseas Safety Protection of Citizens and Institutions of Anhui Province, Anhui will establish risk prevention and control mechanisms targeted at BRI countries, and formulate emergency plans to deal with major political, economic and social emergencies in relevant countries. It will enhance security education and management of “going global” enterprises, strengthen the awareness of safeguarding national security and national interests, and uphold friendship and justice while pursuing shared interests. It will guide local enterprises to carry out project feasibility studies conscientiously to avoid project investment and operation risks. Besides, the province will strengthen contacts with Chinese embassies and consulates abroad, comprehensively use diplomatic, economic, legal and other means to properly solve and handle all kinds of problems arising in the implementation process of various outward investment projects, and practically protect the legitimate rights and interests of Anhui enterprises. vii) Improving the service system. Anhui will accelerate the cultivation of ­enterprise-led overseas investment and transnational operation intermediaries, and build a market-oriented, and international intermediary service system for overseas cooperation with private entities playing key roles. Universities, trade associations and chambers of commerce in the province will be encouraged to cooperate with international investment promotion agencies to carry out special research on the politics, laws, markets and labor conditions in BRI countries, so as to provide going-global enterprises with legal, accounting, taxation, investment consulting, intellectual property right protection, risk assessment and authentication, and other services. It will also put great efforts into the introducing, fostering and development of translation companies and promote the market-based development of language services. viii)  Strengthening strategic interaction with the Yangtze River Economic Belt. Anhui will devote itself to promoting the development of regional linkage and jointly advancing the BRI. It will deepen the division of labor and collaboration

Regional investment analysis report 2015  173 in the Yangtze River Delta, make full use of regional cooperation platforms such as city clusters along the Yangtze River Economic Belt, and establish a sound mechanism for inter-governmental cooperation and exchange so as to jointly study and push forward the construction of major cross-regional infrastructure projects and quicken the opening of comprehensive transportation channels such as interregional railways, highways, waterways and air routes. The province will strengthen practical cooperation in the fields of customs clearance integration, cross-regional trade platforms, and industrial support and cooperation, jointly promote the going-global of local enterprises, products, technology, equipment and services, and collaboratively participate in the effort to improve infrastructure connectivity with neighboring countries and the construction of international economic cooperation corridors. Also, matchmaking efforts will be stepped up in industrial transfer, environmental protection, information-sharing, and social security. 3 Jiangxi (1)  Recent policies of Jiangxi to promote inward and outward investment Jiangxi has issued a series of relevant policies including the Guiding Opinions on Accelerating the Implementation of Going Global Strategy (GFF [2014] No. 25), the Opinions on Expanding Opening up Across the Board and Accelerating the Development and Upgrading of an Open Economy (GF [2014] No. 9), the Circular on Special Actions for Reducing Enterprise Cost and Improving Development Environment (GZ [2016] No. 22), the Circular on Issuing the Plan for the Division of Responsibilities of Provincial Departments for Expanding Opening up Across the Board and Accelerating the Development and Upgrading of an Open Economy (GBZ [2014] No. 27), the Opinions of the People’s ­Government of Jiangxi Province on Deepening the Reform of the Investment System in an All-round Way (GFF [2014] No. 23), the Circular on Issuing Some Measures for Promoting Stable Economic Growth (GFF [2014] No. 26), the Implementation Plan for Jiangxi Province to Participate in the Development of the Silk Road Economic Belt and the 21st Century Maritime Silk Road (GFTZ [2015] No. 47), the Key Points for Jiangxi Province to Participate in the Development of the Silk Road Economic Belt and the 21st Century Maritime Silk Road in 2015 (GFTZ [2015] No. 47), and the Implementation Plan for Accelerating the Integration into the Belt and Road Initiative and Encouraging Jiangxi Enterprises to Participate in International Cooperation (GFF [2015] No. 50). (2)  Inward and outward investment in 2015 1 )  G R O W T H I N T O T A L I N W A R D A N D O U T W A R D I N V E S T M E N T

Utilization of foreign capital: In 2015, there were 640 new foreign-invested enterprises in Jiangxi, down 22.1%; the foreign investment actually used was US$9.47 billion, an increase of 12.1%. A total of 2,158 projects were introduced

174  Development overview from outside the province, up 0.3%; involving US$523.22 billion of investment, up 15.2%. Specifically, 1,387 were major projects worth more than US$100 million, up by 4.3%; the foreign capital actually used in these projects registered US$465.4 billion, up 19.8%. Overseas investment: In 2015, the total turnover of overseas projects contracted by Jiangxi enterprises reached US$3.51 billion, up 23.1%; there were 110 overseas investment enterprises approved in the whole province. The total OFDI increased by 59.9% to US$1.05 billion. 2 )  S T R U C T U R E O F I N W A R D A N D O U T W A R D I N V E S T M E N T

Utilization of foreign capital: First, remarkable results were achieved in attracting large and strong investors to form and develop industrial clusters. In 2015, Jiangxi welcomed three Fortune Global 500 enterprises and 11 Top 500 enterprises of China. The result was an increasingly obvious industrial agglomeration effect. Mainly concentrated in the secondary industry, these projects attracted 73.5% of foreign investment and 70% of out-of-province funds. The proportion of foreign investment in the primary, secondary and tertiary industries in the province was 5.9%, 73.5% and 20.6% respectively. Second, major countries and regions have maintained stable investment in Jiangxi. The top 10 countries/ regions investing in the province remained unchanged, and the total foreign investment actually used registered US$9.015 billion, accounting for 95.2% of the total, of which investment from the Hong Kong SAR and Taiwan, China, made up 80.1% and 5.6% of the total respectively. Third, the structure of foreign investment was further improved. The service sector saw a significant growth with 328 projects over RMB100 million in value introduced from outside the province, 39 more than the previous year, and the actual investment amounted to RMB115.409 billion, an increase of 31.7%, and represented 24.8% of the total, up by 2.25 percentage points. In the manufacturing industry, the proportion of investment in the high-tech manufacturing industry increased. To be specific, investment in the electronic information industry accounted for 7.1% of the total, up 0.3 percentage point, and the biomedicine industry contributed 4.2%, up 1.1 percentage points. Fourth, foreign-invested enterprises eagerly increased their capital. A total of 175 foreign enterprises in the province increased their capital, with contractual foreign investment up to US$1.86 billion, and 54 enterprises saw increases of more than US$10 million with contractual investment up to US$1.2 billion. Overseas investment: First, the scale of overseas project contracting increased rapidly. The value of new contracts signed in the year was US$4.04 billion, up 52.6%, and the total turnover jumped to eleventh place in China and second in Central China. China Jiangxi International Economic and Technical Cooperation Co., Ltd., Zhongding International Construction Group Co., Ltd. and Zhongjing Engineering Group Limited were successively shortlisted as the world’s Top 250 international contractors, ranked 112th, 129th and 142nd respectively. With this, Jiangxi ranked third in China and first in Central China

Regional investment analysis report 2015  175 in terms of the number of local enterprises entering this list. Second, overseas investment rose sharply. In 2015, Jiangxi achieved a total of US$1.05 billion of non-financial outward direct investment in 54 countries and regions. Third, new progress was made in the construction of overseas economic and trade cooperation zones. Four such zones, namely Chinese Center for Promotion of Investment Development and Trade (Zambia) Ltd. constructed by China Jiangxi International, HuaJian International Light Industry City (Ethiopia) PLC, Modern Agricultural Technology Industrial Park proposed by Jiangxi Huamei Foods Industrial Co., Ltd., and China–Russia International Trade City constructed by Zhongge Group were included in the statistics of the Ministry of Commerce of China. 3 )  P R O B L E M S I N I N W A R D A N D O U T W A R D I N V E S T M E N T

Utilization of foreign capital: First, the number of new projects and new contractual foreign investment in Jiangxi Province saw a continuous decline which had a great influence on the future trend of utilization of foreign capital. Second, the province faced a severe shortage of cash investment, and the cash ratio in foreign investment kept falling. Both the amount and the share of cash foreign investment are dangerously low and lower than the figures of Hunan, Hubei and many other provinces. The main reason lies in the lack of introduction of and progress in large-scale projects. Third, foreign-invested enterprises, especially small and micro ones, generally face a shortage of land, insufficient labor resources and difficulty in financing. According to calculation, nearly 80% of foreign investment projects at the county level found it hard to secure land to actually launch construction. Therefore, it is necessary for the province and relevant cities to balance land resources for project construction. In addition, as Jiangxi mainly took over labor-intensive industries such as electronics, light industry, textiles, clothing, shoes and hats, etc., a large amount of labor is needed. However, with 7 million people working outside the province, it was difficult for enterprises to hire skilled workers, and factories may remain out of operation as a result. Moreover, in the aftermath of the financial crisis, poor liquidity and changes in the direction of investment flow had impacts on the construction of foreign capital projects and the production of relevant enterprises. Overseas investment: First, the risk is high. At present, with aggravated political unrest in Europe, the Middle East, North Africa and other regions, the global situation is becoming more and more complicated, and Jiangxi’s resource development projects overseas face great risks. Moreover, developed countries launched stricter examination for investment from China, causing uncertainties for Jiangxi’s overseas M&A projects. Second, there are few information acquisition channels. Due to a shortage of overseas investment management personnel and experience, Jiangxi enterprises can only rely on themselves or their partners to gain effective information about overseas investment in the mineral resources industry. At the same time, the lack of in-depth understanding of the laws and

176  Development overview regulations, investment conditions, religious belief, customs and partners of the destination countries also brings difficulties and risks to the investment projects. Overseas investment and resources development are highly complex activities that require knowledge and skills of technology, production, foreign languages, international law, international finance, international trade and religious belief, as well as practical work experience abroad. Such interdisciplinary talents good at operation and management are in acute shortage in Jiangxi, which impedes the development of local enterprises abroad. Third, it is difficult to secure funding. Some overseas resource development enterprises lack economic strength and are unable to provide sufficient funds for the follow-up construction of their overseas projects. In China, because of credit guarantee, it is very difficult for enterprises to solve this problem on the capital market and through financing loans; due to lack of credit records, it is also difficult for enterprises to secure financing in the host country of their projects. 4 )  P R O S P E C T S F O R 2016

Utilization of foreign capital: First, Jiangxi will continue to improve its foreign investment environment. The lasting effects of campaigns started by Jiangxi to improve the conduct of officials every year will help further improve the service environment and service quality. Review and approval procedures for foreign investment projects will be handled through green channels. Major projects will be reported and discussed at meetings of the provincial government for better coordination, and given priority in such aspects as land use, employment, power utilization and financing. Second, Jiangxi will actively build a good platform for attracting investment. By fully utilizing a series of major investment promotion events including the China International Import Expo, Jiangxi (Hong Kong) Week for Investment Promotion, Jiangxi (Taiwan) Activity Week, Jiangxi– Taiwan Economic and Trade Cooperation Seminar, Overseas Chinese and Ethnic Chinese Investment and Entrepreneurship Fair, the 12th Pan Pearl River Delta (PPRD) Regional Cooperation & Development Forum and Economic & Trade Fair, China International Fair for Investment & Trade, and Jingdezhen International Ceramic Fair, Jiangxi will make every effort to attract investment with a focus on major infrastructure, the photoelectric industry, new energy, automotive manufacturing and spare parts, biomedicine and new medicine, deep processing of tungsten and rare earth and 10 other major industries. Third, focusing on key industries, such as the Poyang Lake Ecological Economic Zone and the revitalization of the former Central Soviet Area in southern Jiangxi, the province will make further efforts to attract investment, and go all out to take over the capacities transferred from in and out of China. It will seize the rare opportunity of the accelerating international industrial transfer, do full justice to the Hong Kong SAR’s advantages as the main source of FDI in Jiangxi and a renowned brand in foreign investment attraction, and concentrate on undertaking modern services such as finance, logistics, software and service outsourcing transferred from there. Considering the strong advantages of Taiwan, China, in

Regional investment analysis report 2015  177 emerging industries, Jiangxi will give priority to taking over capacities from Taiwan’s electronic information, new materials and other emerging industries. In view of the advantages of Europe and the United States in developed real economies, focus will be placed on automobile parts, deep processing of non-­ ferrous metals and high-tech industries in taking over capacities from those places. In particular, Jiangxi will prioritize contact with Fortune Global 500 companies and other multinational companies and introduce leading projects to make progress in investment attraction. Overseas investment: First, Jiangxi will carefully study the overseas investment environment. Guided by China’s overall country- and industry-specific policies for outward investment, Jiangxi will step up its efforts to push its advantageous and leading enterprises in key industries, especially large stateowned enterprises abroad to make investment, and encourage and support private enterprises to go global. Second, the province will strengthen coordination, and improve the overseas investment information reporting mechanism. To this end, Jiangxi will strengthen the inter-departmental coordination mechanism, improve the promotion system, and enhance the macro-guidance and services in connection with the going-global strategy, so as to help enterprises grasp and understand the political, legal and investment environment in destination countries in a timely manner, and effectively forestall and defuse related risks. It will further the contact and communication with Chinese embassies and consulates abroad, and strengthen the information feedback on and the statistical system for overseas investment activities, so as to provide authoritative and reliable information on overseas market demand, investment environment, laws and regulations, and corporate credit, and promote the healthy development of overseas investment activities. Third, the province will strive for policy support and financial support. Jiangxi will keep close contact with the National Development and Reform Commission, the Ministry of Finance and other ministries and commissions to strive for funding from the national level, and actively promote the establishment of special funds for provincial-level overseas investment. It will strengthen coordination and communication with relevant policy banks and insurance institutions, such as the China Development Bank Jiangxi Branch and the Export-Import Bank of China Jiangxi Branch, and give preferential financial and insurance support to encouraged outward investment projects in line with the province’s overseas investment plan and industrial orientation, so as to solve the long-standing difficulties in overseas investment and financing. Fourth, the province will work harder to provide better services for creating a more relaxed environment for the implementation of the opening-up strategy. Jiangxi will establish and improve an overall planning and promotion mechanism for its major projects by drawing support from the relevant meetings at the provincial level and other promotion mechanisms, so as to ensure the supply of major production factors and push key projects forward. The province will further promote investment facilitation. It will improve the parallel approval service model, implement online review and approval of foreign investment in an allround way and simplify the approval process. With these, the approval efficiency

178  Development overview will be improved. The province will improve the logistics conditions and develop a large port logistics system by putting more efforts into the construction of the air cargo hub project at Nanchang Changbei International Airport, expedite the establishment of Jiujiang Bonded Port Area, and running more chartered freight trains for railway–sea intermodal transportation. (3)  Investment in and from BRI countries in 2015 1 )  I N V E S T M E N T I N B R I C O U N T R I E S

First, in terms of agricultural investment, Jiangxi promoted key projects like the agricultural technology demonstration center and agricultural comprehensive development project of Jiangxi Ganliang Industrial Ltd. in Equatorial Guinea, and the vegetable greenhouse project of Jiujiang Ows Building Materials Co., Ltd. in Ufa, Russia. Second, in terms of cooperation in mineral resources development, Jiangxi pushed forward the copper mine project developed by Jiangxi Copper Corporation Limited and a local partner in Turkey, and the nickel and cobalt mine project developed by Jiangxi Tungsten Holding Group in cooperation with MT of Turkey. Third, in terms of energy cooperation, Jiangxi made progress in the construction of solar cell assembly production line of Jinko Solar in Penang, Malaysia, and two 2×55MW coal-fired power plant projects in Pakistan by Jianglian Heavy Industry Group Co., Ltd., etc. Fourth, in terms of advanced manufacturing cooperation, centered on the innovation-driven industrial upgrading and the improvement of international competitiveness of relevant industries, Jiangxi pushed forward the cooperative light and small civil helicopter production project between Jiangxi Changxing Aviation Equipment Co., Ltd. and an Italian company and the M&A project of Philips Lumileds by Lattice Power (Jiangxi) Corporation. 2 )  I N V E S T M E N T I N B R I C O U N T R I E S

Jiangxi’s direct investment in 30 BRI countries and regions totaled US$640 million, an increase of 251%. Jiangxi signed US$598 million of contracts for projects in 25 BRI countries, six times over the previous year. From January to November 2015, Jiangxi’s overseas contracted projects achieved a turnover of US$3.007 billion, with 73 new projects above US$5 million in value and a total contractual amount of US$2.535 billion. In 2015, the province arranged 38 economic and trade cooperation events in the BRI countries, and organized more than 300 enterprises to explore BRI markets, bringing Jiangxi products to all these countries. 3 )  P R O S P E C T S F O R 2016

In 2016, while acting upon the Implementation Plan for Jiangxi Province to Participate in the Development of the Silk Road Economic Belt and the 21st Century Maritime Silk Road and the Implementation Plan for Accelerating the

Regional investment analysis report 2015  179 Integration into the Belt and Road Initiative and Encouraging Enterprises to Participate in International Cooperation, Jiangxi will accelerate its integration into the efforts to implement the BRI, and promote the construction of a number of strategic channels, the completion of a number of cooperation platforms, and the effective operation of a number of cooperation mechanisms. In addition, it will deepen overseas cooperation exchanges, make preliminary achievements in a group of major cooperation projects, and manage to mobilize the whole province to participate in the implementation of the BRI. 4 Hunan (1)  Recent policies of Hunan to promote inward and outward investment Utilization of foreign capital: Administrative Measures for the Approval and Filing of Foreign Investment Projects in Hunan Province. Overseas investment: Administrative Measures for the Approval and Filing of Overseas Investment Projects of Hunan Province, the Implementation Plan for Hunan Province to Participate in the Development of the Silk Road ­Economic Belt and the 21st Century Maritime Silk Road, the Implementation Opinions on Promoting International Capacity and Equipment Manufacturing Cooperation, and 2015–2017 Action Plan of Hunan Province for Participating in the Belt and Road Initiative. (2)  Inward and outward investment of Hunan in 2015 1 )  G R O W T H I N T O T A L I N W A R D A N D O U T W A R D I N V E S T M E N T

Utilization of foreign capital: In 2015, the total contractual foreign investment in Hunan reached up to US$11.82 billion, up 5.8% year-on-year; the actually used foreign investment was US$11.56 billion, up 12.7% year-on-year. There were 562 new foreign-invested enterprises and projects, up 4.3% year-on-year, including 34 projects with total investment of over US$30 million. Overseas investment: In 2015, Hunan’s contractual outward investment was US$2.78 billion, a rise of 53.1% year-on-year; its OFDI amounted to US$1.48 billion, up 55.9% year-on-year. New contracts for overseas projects and labor cooperation amounted to US$5.91 billion in value, up by 13.9% year-on-year, with the turnover totaling US$5.18 billion, a year-on-year growth of 27.1%. 2 )  S T R U C T U R E O F I N W A R D A N D O U T W A R D I N V E S T M E N T

Utilization of foreign capital: The overall distribution of investment across industries improved, yet the manufacturing industry remained the most attractive. In 2015, there were 74 new foreign investment projects approved in the primary industry in Hunan Province, up 32.14% year-on-year, with a total ­contractual investment of US$854 million, up 11.45% year-on-year; the actually

180  Development overview used foreign investment stood at US$627 million, a growth of 8.29% year-­­­onyear. There were 277 new projects in the secondary industry, down 8.88% from the previous year; the contractual investment registered US$6.875 billion, up by 11.15% year-on-year; and the amount actually used reported US$7.145 billion, rising 8.52% year-on-year. Within the secondary industry, there were 255 manufacturing projects, down 5.56% year-on-year; the contractual investment was US$5.969 billion with a year-on-year increase of 15.04%; the amount actually used was US$5.666 billion, an increase of 4.97% over the previous year. The manufacturing projects mainly concentrated in the non-metallic mineral products industry, and the general equipment manufacturing industry. There were 211 new foreign investment projects in the tertiary industry, up 17.88% year-onyear; the contractual investment amounted to US$4.094 billion, a fall of 2.99% year-on-year; and the amount actually used saw an increase of 22.21% to US$3.793 billion. New projects were mainly in the real estate industry, wholesale and retail sales and other industries. The ratio of foreign investment used in the primary, secondary and tertiary industries was 5.42: 61.78: 32.79. Foreign investment used was mainly from the Hong Kong SAR, Taiwan, China, and other Asian countries and regions. The province welcomed 464 new projects from Asia, up 5.94% year-on-year; the contractual investment was US$9.786 billion, an increase of 19.36% year-on-year; the amount actually used was US$8.686 billion with a year-on-year growth of 12.43%, accounting for 75.11% of the total. In Asian countries and regions, the number of new foreigninvested enterprises from the Hong Kong SAR in Hunan was 307, a fall of 2.23% year-on-year; the contractual investment stood at US$7.515 billion, up 12.25% year-on-year; the actual utilization of investment from the Hong Kong SAR increased by 6.09% to US$6.787 billion. Newly approved Taiwan-invested enterprises in Hunan numbered 88, up 35.38% year-on-year with a contractual investment of US$1.239 billion, up 120.27% year-on-year, of which the actually used investment was US$831 million, an increase of 64.14% year-on-year. The total investment from the Hong Kong SAR and Taiwan, China in Hunan accounted for 65.87% of the total. The actual European investment in Hunan reached US$1.024 billion, up 29.84% year-on-year. Free ports in Latin America such as the British Virgin Islands actually invested US$549 million in Hunan, down 37.28% from a year earlier. Canada and the United States’ investment in Hunan was US$308 million, a year-on-year increase of 4.53%, of which investment from the United States was US$254 million, up 7.49% year-on-year. Oceania’s actual investment in Hunan reached US$138 million, a rise of 71.27% year-on-year. Investment companies invested US$811 million in Hunan, up 113.12% year-on-year. Overseas investment: Initial achievements were made in participating in the BRI implementation. According to the data of the year, Hunan approved 66 overseas enterprises in BRI countries, with a contractual Chinese investment of US$1.504 billion, a new contractual investment of US$1.637 billion for overseas projects and labor cooperation, and a turnover of US$1.855 billion, representing 54.1%, 27.7% and 35.8% of the province’s total respectively. All saw a

Regional investment analysis report 2015  181 significant increase over the previous year. At the same time, a number of major projects in BRI countries were in preparation or in progress, such as the 800 km highway project in Laos, the agricultural industrial park project in Cambodia, and the Bangladesh sewage treatment project. International capacity cooperation became the focus of outward investment. Major international capacity cooperation projects offered important support for the rapid growth of outward investment, which prompted impetus for advantageous and surplus capacity to go global. SANY Heavy Industry Co., Ltd. invested US$170 million in a production base in Brazil and overseas industrial parks, Zhuzhou Kibing Group Co., Ltd. invested US$190 million to set up a float glass production line in Malaysia, Tidfore Heavy Industry Co., Ltd. invested US$220 million in a joint venture with Brazilian partners to build eight heavy-duty ships for marine and shipping services, and Hunan Jiancheng Cement Plant built a cement production line with an investment of US$90 million in Kazakhstan. The transfer of capacity in return mobilized the project contracting business of Hunan enterprises in local places. Hunan Penghui Hydropower Development Co., Ltd. invested US$70 million in a hydropower station in Nepal, giving full play to the advantages of Hunan in small hydropower project development. 3 )  P R O B L E M S

Utilization of foreign capital: Affected by the slowdown in global economic growth and rising domestic costs, transnational investment slumped on the whole. Plus, the low investment and business costs of some developing countries in Southeast Asia attracted some foreign investment, and the competition between central and western provinces is becoming fiercer. Hunan is facing a severe situation in absorbing foreign capital. First, there is a lack of unified legal norms, and high access threshold for foreign investment. At present, China’s laws and regulations on absorbing foreign capital are very scattered. In addition to the “three laws” (Law of the People’s Republic of China on Chinese-Foreign Equity Joint Ventures, Law of the People’s Republic of China on Chinese-Foreign Contractual Joint Ventures and Law of the People’s Republic of China on Wholly Foreign-Owned Enterprises), there are many administrative regulations, departmental rules and policy documents targeting various fields and industries, and during the specific review and approval process, the materials that investors are required to provide are also different. Meanwhile, some industries in China, especially the service sector, have higher barriers and more restrictive conditions on foreign investment for market access, and additionally, the procedures for foreign investment in such links as industry access approval and foreign exchange are cumbersome. For example, there is a security review in some industries for foreign-invested M&As, some investors prefer to register as domestic capital or reinvestment by foreign-invested enterprises, and a few approved foreign-invested enterprises have been converted into domestic-funded enterprises.

182  Development overview Second, domestic costs have risen sharply and foreign investors have become more prudent. Many foreign-invested enterprises claimed that their investment and business costs had been rising year by year, and profits fell sharply. Third, there is vicious competition in investment promotion across the country. At present, there is no unified policy and guidance for foreign investment attraction in our country, and the administrative division and performance evaluation have hindered effective regional coordination, leading to high isomorphism in various regions and a lack of effective regional division of labor. Fourth, there is no match between departments regarding the approval and follow-up management of foreign investment projects. In terms of approval and registration, there are provincial and municipal development and reform commissions and departments of commerce for the review and approval. In addition, there are industrial and commercial departments for the registration of municipal and national industrial parks. There is thus a mismatch between the power of different departments. Some enterprises still have to go back and forth between two or even three authorities for various formalities, which increases the time and cost. In terms of joint annual report of foreign-invested enterprises, the systems for this purpose under the commercial, industrial and commercial, and foreign exchange departments are not aligned, and the starting time of relevant work is inconsistent as well. Fifth, investment sources are over-concentrated, and the structure and quality of foreign investment utilization is poor. The Hong Kong SAR and Taiwan, China were the main sources of foreign investment in Hunan, with actual investment accounting for 66% of the total in 2015. Such a concentration of sources and a lack of support from major projects, in particular, a lack of investment from Fortune Global 500 enterprises and big projects with strong impetus in promoting industries caused obviously insufficient use of foreign investment subsequently. Sixth, the role of industrial parks as platforms is not fully leveraged. Although Hunan is in the forefront of all central and western regions of China in respect of the number of state-level industrial parks, the parks have not fully played their role in absorbing foreign capital, resulting in low extroversion and low ranking of the province in terms of comprehensive strengths. Seventh, after the reform of business policies and the adjustment of government functions, the statistical work becomes more difficult. As registered capital management has been changed from a paid-in system to a subscription-based system to release the vitality of the market, it usually takes a long time for foreign enterprises to complete the payment of the registered capital. Thus, actual amount of investment tends to be low although the contractual value is high. In the current round of adjustment in the functions of government bodies, the commercial departments in most cities, prefectures, counties and districts of Hunan have merged with the departments of food, economic and information, and science and technology, and most of the people in charge of foreign investment statistics are new employees unfamiliar with the work. In some places, a statistician may take several offices concurrently and move frequently, slowing work progress.

Regional investment analysis report 2015  183 Overseas investment: Hunan has made certain achievements in its goingglobal campaign and has cultivated some excellent enterprises, but the province has a long way to go to meet national requirements and build an open economy. Compared with the more developed coastal provinces, Hunan lags behind mainly in the following aspects: First, the mindset is not open enough. The province does not attach enough importance to or have sufficient understanding of going-global. Not only are there no dedicated departments or personnel responsible for relevant work, but also the authorities do not understand the significance of going-global or the policies regarding overseas economic cooperation. People may even take it as the same thing as foreign trade. Some prefectures and counties that have certain knowledge in this respect fix their attention on foreign labor cooperation. It is believed that going-global not only brings no benefit to local economic development, but also causes the loss of local tax revenues. This is in sharp contrast to the enthusiasm of enterprises to go global. This has seriously hindered the healthy development of going-global work in Hunan. Second, the overall planning and coordination is insufficient and the relevant management system is not sound. Going-global is a systematic program, which requires synergies to be formed across different levels and departments of the government. However, Hunan has always lacked a powerful overall planning and coordination mechanism, so it cannot fully pool resources from all sectors. The consequences have led to great difficulties in promoting the work and few results. In particular, in the management of overseas investment, there are not relevant legal provisions and administrative methods, resulting in the objective existence of multi-headed management. From the perspective of the characteristics of going-global activities, there are adverse factors such as the location of overseas enterprises and the great difficulties in supervision and services. The lack of a strong and efficient management system has increased the burden of enterprises, lowered the efficiency of their decision-making, and led to a rise in the risk of going-global. Third, investment entities are not strong enough, and international strategy is lacking. Going-global is a comprehensive and complex economic and trade activity, which requires entities to have high operational strength. According to the actual conditions of Hunan, there are not many enterprises fully capable. Hunan brands that really have great influence in the world are still rare. At present, most of Hunan enterprises go global for the sake of short-term gains, and lack long-term strategic thinking and systematic planning. The shortage of talents for international business operation, the immaturity of international operation teams and the lack of experience in developing international markets have also brought risks to enterprises who have ventured out of China and restricted the scale, quality and level of international development of enterprises. Fourth, the service support system lags behind and the risk of going-global increases. The financing threshold at domestic financial institutions is high and the financing channels are few. Moreover, financial institutions generally do not accept the overseas assets of enterprises as a loan guarantee. With these,

184  Development overview enterprises, especially the private enterprises, have difficulty in financing. Moreover, the fact that the branches of Chinese financial institutions are mostly located in developed countries and regions such as Europe and America, but rarely in Asia and Africa where Hunan’s going-global enterprises concentrate, has also made it difficult for Hunan enterprises to get funding through domestic guarantee. The service ability and quality of domestic legal, accounting, financial and information consulting institutions are relatively low, while the price of foreign consulting institutions is often high. Such a gap has indirectly caused an increase of international operation costs for enterprises. Due to incomplete risk prevention mechanisms, going-global enterprises generally face higher risks than at home. Particularly, in countries and regions such as Asia and Africa, emergencies and disturbances occur from time to time, bringing great uncertainties to enterprises in transnational operation. Currently, it is difficult to provide effective guarantees for enterprises to go global because of the inflexible mechanisms, few insurance types and high premium in policy or commercial insurance institutions. 4 )  T R E N D S A N D P R O S P E C T S F O R 2016

Utilization of foreign capital: In line with the development ideas of innovationdriven, coordinated, green, open and shared development, in order to expand the sources of foreign investment, enhance the quality of the enterprises introduced in, and achieve better regional layout, Hunan will give full play to its regional advantages in the implementation of the BRI and actively follow and fully integrate into the national opening-up and development strategy. It will innovate in the means of investment attraction, improve the environment for foreign investment, push up the quality of investment attraction services and enhance the bearing capacity of industrial parks, so as to realize targeted investment attraction according to Hunan’s development characteristics so that investment attraction efforts can contribute more to the development of Hunan’s economy. First, the province will attach equal importance to expanding the total quantity and improving the quality of foreign investment. Efforts will be made to expand the scale and improve the quality of foreign investment, and focus will be placed on the introduction of quality projects and large projects with strong industrial driving capacity and great influence on transformation and upgrading. On the one hand, Hunan should pay attention to the total amount of foreign investment, constantly broaden investment channels for more foreign capital to come in. On the other hand, it should highlight the quality of investment attracted, and synchronize investment attraction and talent and technology introduction. Only by paying equal attention to the total quantity and quality can investment attraction work be done in a way that benefits short-term economic development, raises the industrial development level of the province and promotes the sustainable development of its economy. Second, the province will continue to give well-targeted guidance and highlight key points. In accordance with their respective industrial development

Regional investment analysis report 2015  185 characteristics, advantages and regional characteristics, all cities, prefectures and zones should attract investment in a targeted manner with a focus on leading industries. In pursuance to their own location and transportation features, as well as the existing customer base, each part of the province should strengthen the link-up with regions prioritized for foreign investment in a targeted manner and improve the quality of investment attraction. Based on the national development strategy and the layout of key industries, investment attraction efforts should be made in line with national strategies like the BRI, Made in China 2025, and the Internet Plus initiatives. Third, Hunan will pursue domestic and foreign investment at the same time. Domestic and foreign capital is of equal importance to the economic development of Hunan Province. To attract investment, the province should not only pay attention to attracting investment and undertaking industrial transfer from the Pearl River Delta, Yangtze River Delta and Jiangsu and Zhejiang Provinces, but also emphasize efforts to maintain and attract more investment from the Hong Kong SAR and Taiwan, China, as well as from Japan, the Republic of Korea, Europe and the United States. In terms of preferential policies, domestic and foreign capital enjoys the same treatment; in terms of access to some industries, foreign capital is catching up with domestic capital. Only if the scale of foreign capital and domestic capital expands synchronously can Hunan optimize its investment attraction structure and give better play to the role of investment attraction. Fourth, the province will adhere to a problem-oriented and goal-oriented approach. Only when investment attraction is conducted in view of the main problems and objectives of economic development in Hunan can it become a reliable driving force to promote the sustainable development of Hunan economy. In response to the current economic development problems in Hunan and the development objectives outlined in Hunan’s 13th Five-Year Plan, the province will make clear the goals to be accomplished during the 13th Five-Year Plan period, adhere to a goal-oriented approach and the combination of shortterm and long-term goals, and translate the goals into the tasks to be finished in the period. Meanwhile, the province should pool efforts to address its current problems in investment attraction as well as other problems that need to be solved, and build a new pattern in this regard. Overseas investment: 2016 is the beginning year of the 13th Five-Year Plan period. According to the current situation, Hunan is in a golden period of development. Although the international economic recovery is still slow and the ­international financial market is full of uncertainties, Hunan is still expected to maintain a relatively fast pace of development in its going-global efforts. Judging from the international environment, first, the situation of a low-speed growth in the world economy is not likely to change for the time being. After the international financial crisis, the global economy faltered in its pursuit of a new balance and a strong growth momentum. Demand constraints are further intensified, and the market becomes a scarce resource which various countries ­vigorously compete for. Second, new changes have taken place in the pattern of

186  Development overview international industrial division of labor. Some middle-to-high-end manufacturing industries flew back to developed countries, replacing some cross-border trade and investment. The growth rate of global trade has been lower than that of the world economy for three consecutive years, and cross-border investment has not recovered to the level before the international financial crisis. A new round of scientific and technological revolution and industrial transformation is ready to launch, and the global industry chain, supply chain and value chain are integrated at a faster pace. Third, the system of international rules is facing profound changes. The multilateral trade system has developed in a bumpy way, the Doha Round of World Trade Talks in the World Trade Organization is even harder than it looks, and regional economic cooperation is in the ascendancy. Developed countries are committed to formulating new rules for international trade and investment, trying to increase the development costs of emerging economies and developing countries, and to occupy the commanding heights of future international competition. In terms of the domestic environment, first, new changes have happened in China’s comparative advantages. In recent years, China’s factor cost continues to climb, the resource and environment restrictions have increased, and the traditional comparative advantages have been significantly weakened. At the same time, China’s strengths in respect of human capital, capital supply, scientific and technological innovation, infrastructure and industrial agglomeration have been continuously enhanced; the capital and technology-intensive comparative advantages are being developed and strengthened; and the foundation for fostering new advantages in international economic cooperation and competition has become more solid. Second, China’s comprehensive national strength and international status continue to rise. China has become the world’s second-largest economy, and its importance and influence in the global economy have increased significantly. Our ability to participate in international affairs has been markedly enhanced. We have more conditions than ever before to actively plan a new strategic layout for opening-up and to actively create a favorable external environment for domestic development. Third, the economic new normal calls for further improvement in opening-up. With the economic development entering a new normal, it has become more urgent for China to adjust the economic structure and change the mode of economic development. It is necessary to introduce advanced elements by expanding opening-up and improve the core competitiveness of industries; and it is necessary to change China’s dominant position in assembling and manufacturing in the international division of labor, participate in the global value chain in all directions, and raise the position of our industry in the global value chain. In terms of provincial environment, first, economies of scale gradually come into being in Hunan’s “going global.” In ASEAN, Africa and other countries and regions, Hunan enterprises are increasingly influential through foreign economic cooperation, and its advantageous industries such as construction machinery, rail transit, building materials and agriculture have won more and more fame internationally. Second, the demonstration effect of going-global of Hunan has been continuously enhanced, and a batch of outstanding going-global

Regional investment analysis report 2015  187 enterprises have obtained good development, which will provide channels, resources and confidence for the latecomers and help more enterprises achieve international development. Third, the endogenous driving force is increasing Hunan enterprises who have gone global. Overcapacity is widespread in the province, and the pressure to cut excess capacity is mounting. The increasing willingness to explore new markets and seek new opportunities overseas through going-global is conducive to pushing the advantageous enterprises in Hunan to go global, cut overcapacity and drive industrial upgrading. (3)  Investment in and from BRI countries in 2015 There are no statistics on the investment from BRI countries in Hunan. Hunan’s investment in BRI countries: According to data of the year, Hunan approved 66 overseas enterprises in BRI countries, and the contractual Chinese investment was US$1.504 billion, the new contracts for foreign project contracting and labor cooperation amounted to US$1.637 billion, and the turnover was US$1.855 billion, accounting for 54.1%, 27.7% and 35.8% of the province’s total respectively, representing significant increases over the previous year. In the meantime, a number of major projects in BRI countries are being planned and promoted, such as the 800km highway project in Laos, the agricultural industrial park project in Cambodia, and the Bangladesh sewage treatment project.

(III)  West China 1 Guangxi (1)  Utilization of foreign capital in Guangxi in 2015 1 )  U T I L I Z A T I O N O F F O R E I G N C A P I T A L

i)  Scale of foreign capital utilization. In 2015, a total of 142 foreign investment projects were approved in Guangxi, up 2.9% year-on-year. The contractual foreign investment amounted to US$3.357 billion, an increase of 75% year-onyear; the actual utilization of foreign investment was US$1.722 billion, up 72% year-on-year, a record high. Specifically, BRI countries invested in 25 projects in Guangxi, with a contractual investment of US$711 million and of US$500 million actually used, mainly from Malaysia and Singapore. Among them, 13 projects were invested in by enterprises from Malaysia, with a contractual investment of US$2.16 million and an actual utilization of US$39.86 million. Eight projects were invested in by enterprises from Singapore with a contractual investment of US$668 million and an actual utilization amount of US$449 million. The investment mainly went to transportation, warehousing and postal services, manufacturing, and wholesale and retail sales. ii)  Characteristics of foreign capital utilization. First, main foreign investment sources remained the same. In 2015, there were 26 countries and regions

188  Development overview (including free islands) investing in Guangxi. The Hong Kong SAR remained the top source, with an actual investment of US$544 million, accounting for 31.60% of the total. ASEAN’s investment in Guangxi picked up, with the actual investment up more than 10 times to US$499 million, representing 29.02% of the total, securing the second place among all source countries and regions. ASEAN’s investment in Guangxi was mainly from Singapore, who made an actual investment of US$449 million. Investment from the EU increased slightly, with an actual investment of US$238 million, making up 13.82% of the total, of which Sweden, in particular, contributed an actual investment of US$188 million. Second, the industries receiving foreign investment remained unchanged generally. Foreign investment concentrated in the secondary industry, and the manufacturing industry was still the most attractive. The actual foreign investment reached US$567 million in the year, accounting for 32.94% of the total. Thanks to the rapid development of foreign investment in M&A, transportation, warehousing and postal services, the actually used foreign investment was US$451 million, making up 26.21%. The real estate industry actually utilized US$362 million of foreign investment, accounting for 21.03% of the total. Agriculture, forestry, animal husbandry and fishery, and water, environment and public facilities management utilized 5.82% and 3.48% of the total foreign investment in Guangxi respectively. At the same time, foreign investment gradually shifted its focus to services, high-tech, emerging industries and modern agriculture. The utilization of foreign investment in the service sector continued to grow, with three financial leasing companies, one air transport service company and four tourism management service companies approved; the real estate industry saw a slowdown, with the actually used investment falling from 40.62% of the total in 2014 to 21.03% in 2015, down by nearly 20 percentage points. Third, the number of major foreign investment projects increased. The investment in major projects picked up to a certain degree, and new large-scale projects have increased significantly. During the year, there were nine large projects utilizing over US$50 million of foreign investment (including four projects with over US$100 million of investment), totaling US$1.18 billion and accounting for 68.52% of the total amount utilized in Guangxi. The establishment of Guangxi Shengran Eco-agriculture Co., Ltd. and Guangxi Beibu Gulf-PSA International Container Terminal Co., Ltd. with a total investment of approximately US$300 million, and the foreign capital acquisition of Guangxi Jinchuan Nonferrous Metals Co., Ltd. (US$147 million), Guangxi Guilin-Xing’an Expressway and two other transportation infrastructure construction projects (about US$450 million) were the highlights. Fourth, the models of foreign capital utilization showed a diversifying trend. In addition to the establishment of foreign-owned enterprises, joint ventures and other traditional models of investment, foreign M&A of domestic enterprises became an important new way for the autonomous region to use foreign capital. For example, several major projects including the foreign capital M&A of three

Regional investment analysis report 2015  189 major transportation infrastructure projects such as the Guilin-Xing’an Expressway, Guangxi Jinchuan Nonferrous Metals Co., Ltd., Guangxi Guangxing Automobile Sales and Service Co., Ltd. and Guangxi Vector Biotech Co., Ltd. diversified Guangxi’s foreign capital utilization models. Progress was also made in the listing and financing of foreign-invested enterprises. Guangxi Lucheng Water Co., Ltd. was successfully listed on the Shanghai Stock Exchange, the first listed company in the water production and supply industry of Guangxi. Fifth, all cities made great progress in utilizing foreign capital. The Beibu Gulf Economic Zone still maintained a strong development trend with the actual utilization of foreign investment amounting to US$956 million, or 55.51% of the total. From the perspective of growth rate, 11 out of the 14 cities in Guangxi achieved a year-on-year increase in paid-in foreign investment. Among them Guilin, Laibin, Baise, Qinzhou and Wuzhou saw significant increases. From the perspective of absolute value, Guilin ranked first with US$653 million, accounting for 37.89% of the total; Qinzhou ranked second with US$324 million, making up 18.81% of the total; and Nanning ranked third with US$310 million, representing 18.00%. 2 )  P R O B L E M S I N U T I L I Z A T I O N O F F O R E I G N C A P I T A L

There are still many uncertainties in the global economic development, and the competition for foreign direct investment in the world tends to be fiercer. Some transnational corporations become less confident in investment in China. There is room for further improvement in China’s investment environment. The downward pressure on the domestic economy still exists, plus a continuous rise in business costs for land, water, electricity, raw materials, logistics and labor, increasing operating pressure of foreign-invested enterprises. In the future, China will enter a new normal stage of steady and slow development in terms of foreign investment. The increasingly fierce competition among provinces and cities for foreign capital resources and the weakening preferential policies for foreign capital have posed a challenge to investment promotion in Guangxi. Guangxi’s investment environment needs to be further improved, and the management systems for utilizing foreign capital need to be bettered. For a long time, Guangxi has maintained a small amount of foreign investment stock and launched few large projects. The industrial layout of transnational corporations in China has been basically set, making it more and more difficult to attract foreign investment and to achieve material growth in the utilization of foreign investment. 3 )  W O R K P L A N F O R 2016

In 2016, Guangxi will remain committed to attracting investment and strengthening trade, and strengthen policy guidance, enhance service efficiency, give prominence to investment promotion, and build a platform for attracting foreign investment into industrial parks in the principle of “active action, reform and innovation, targeted efforts, all-round” policy implementation and drive for ­progress

190  Development overview on all fronts. It will speed up the cultivation of competitive advantages and new growth drivers for utilizing foreign investment and seek breakthroughs in terms of the amount and quality of foreign investment utilized in the autonomous region through the transformation of government functions, the transformation in the models of foreign investment utilization, and improvement in the investment environment and the structure of foreign investment. First, Guangxi will deepen the reform of its foreign investment management system. Guangxi will simplify and improve the approval procedures for foreign investment, shorten the time required for approval, and effectively improve administrative efficiency. It will explore reform of the foreign investment management system, and actively probe the negative list management model. Second, it will innovate in the use of foreign investment and highlight industry chain investment. Guangxi will innovate in financing modes and encourage foreign investors to set up investment companies, equity investment funds, venture capital funds, etc. By combining investment, technology and intelligence attraction, it will vigorously develop the headquarters economy, attract multinational companies to establish regional headquarters, R&D centers and functional facilities, and foster new economic growth points. It will study the approach of attracting foreign investment upstream and downstream industry chains. Third, it will coordinate domestic and overseas markets to broaden channels for attracting foreign investment. Guangxi will unswervingly promote goingglobal and bringing-in simultaneously, and roll out investment promotion activities energetically. It will go to Beijing, Shanghai, Guangzhou and other places where foreign enterprises concentrate to bring in foreign investment. It will also go to ASEAN, the Hong Kong SAR, the Macao SAR and Taiwan, China, to stage matchmaking campaigns and themed investment promotion events. It will expand and deepen investment cooperation with developed countries in Europe and America such as Germany, the United Kingdom, France and the United States. Aiming to attract large and strong investors, it will continue to invite Fortune Global 500 companies to take tours in Guangxi and strive to make breakthroughs in utilizing foreign investment in key areas. Fourth, Guangxi will further optimize the investment structure. Guangxi will step up its efforts to develop new competitive advantages in the utilization of foreign investment, combine investment attraction with Guangxi’s advantages and featured industries, encourage and channel foreign investment to industries such as modern services and strategic emerging industries, and constantly improve the industrial structure of foreign investment. It will actively introduce foreigninvested enterprises in high-tech industries, processing and trade and encourage foreign investment in its high-end manufacturing, modern services and strategic emerging industries. It will focus on the introduction of leading enterprises and multinational enterprises engaged in trade and commerce, retail sales, logistics, e-commerce, the Internet of Things and finance in the service sector. Fifth, Guangxi will make efforts to create a good investment environment. Guangxi will ensure that projects are well tracked and served, actively assist

Regional investment analysis report 2015  191 enterprises in solving the problems and difficulties encountered in production and operation through sound coordination efforts, and create a fair and orderly market environment. While tackling problems in big projects, it will track and serve major investment projects, do a good job in the coordination and service delivery for enterprises, and attract big leading projects to settle in Guangxi. With these, there will likely be more projects adding to their existing capital and making more investment. In addition, Guangxi will strengthen guidance for national development zones, strive to build a new platform for pooling foreign investment and prompt a rise in both the quality and quantity of foreign investment utilization. (2)  Overseas investment of Guangxi in 2015 1 )  S C A L E A N D C H A R A C T E R I S T I C S

i)  Outward investment. In 2015, Guangxi enterprises established 72 overseas investment enterprises (including capital increment projects and overseas institutions, the same below), with a total contractual investment of US$1.607 billion, including of US$1.366 billion from the Chinese side; the paid-in investment stood at US$595 million, a year-on-year increase of 105.50%. The investment was mainly made in such industries as services, infrastructure, manufacturing, agriculture and mining. ii) Overseas project contracting. In 2015, new projects contracted overseas amounted to a total value of US$656 million, achieved a turnover of US$940 million, and the number of workers hired at the end of the project period was 3,656. Overseas contracted projects mainly involved housing construction, public utilities works, power installation, industrial manufacturing, and communications. iii) Main characteristics. First, new breakthroughs were made in enterprises going global by establishing bases and industrial parks overseas. SAIC-GM Wuling established a manufacturing base in Indonesia; Beihai Beingmate Nutritious Food Co., Ltd. set up a processing plant in Australia; Taiwan-funded enterprises invested an electronic industrial park in Cambodia via Beihai; Fenglin Group built a wood processing industrial park in New Zealand; and China–­ Cambodia Agriculture Promotion Center and KopSrov Agriculture Development Center were officially started. Compared with the previous years, Guangxi’s outward investment has shown an obvious trend in establishing bases and industrial parks since 2015. Second, new breakthroughs were made in developing new markets. LiuGong Machinery Co., Ltd. explored the South American market, and the contractual Chinese investment was US$3.95 million. Other enterprises’ investment in Africa and Oceania increased substantially. Specifically, Chinese investment from Guangxi in Oceania increased by more than 80 times year-on-year to US$82.1 million; the contractual Chinese investment in Africa reached US$80.12 million, up more than 40 times from the previous year, which helped Guangxi’s manufacturing and mining industries go global.

192  Development overview Third, in terms of overseas projects, Guangxi International Construction Engineering Co., Ltd. signed contracts on FERRAK Bioenergy Sugar Factory and Winery Project in the Dominican Republic of Latin America, with a contractual investment of US$219 million. It is the first time that Guangxi enterprises have undertaken projects in this country. Fourth, new breakthroughs were made in private enterprises’ going-global efforts. In 2015, the confidence of private enterprises in going-global increased greatly. More than 60% of the 60 Guangxi enterprises investing abroad were private enterprises and the contractual investment involved was US$1.101 billion, twice the figure of the previous year and accounting for 89% of the total. This helped break the long-term dominance of state-owned enterprises in this regard. Fifth, new breakthroughs were also made in the growth of exports under projects. In 2015, under the influence of a significant growth in new overseas project contracts, the exports under the projects of Guangxi increased by 85% on a year-on-year basis to US$56.63 million, which contributed to the new development of overseas contracted projects. Sixth, a comprehensive information service platform for overseas investment cooperation was preliminarily put in place. In cooperation with Bank of China, a special training course on letter of guarantee was launched, and the construction of an overseas risk platform has been promoted with China Export & Credit Insurance Corporation. 2 )  P R O B L E M S

The ability to go global is still low. In general, the capital strength of Guangxi foreign trade enterprises is not strong and their investment ability is insufficient. No cluster effect has developed as most enterprises operate single-handedly. Although there has been a significant increase in approved outbound investment cooperation projects since 2015 compared with 2014, the average contractual investment of each project was only about US$25 million, showing a small investment scale. Overseas investment and cooperation concentrated highly, increasing the risk. Guangxi’s overseas investment markets are mainly the ASEAN, and the market of overseas contracted projects is mainly Angola. The economies of scale have not been formed yet. As a result of the changing international situation, some ASEAN and African countries are suffering from constant wars or rising threats for wars; some are facing increasing political risks such as political riots, expropriation, currency exchange restrictions and government default; project owners in some countries are at higher commercial risks of breach of contract and bankruptcy, which have led to significant risk exposure in overseas assets and some projects. It is difficult for overseas investment and cooperation enterprises to secure financing. With the further implementation of the BRI and the going-global strategy, despite the increasing demand for overseas investment and

Regional investment analysis report 2015  193 cooperation, how to put into action the financial support policies of the central government and the government of the autonomous region remains a key issue. Going-global enterprises are still facing many difficulties in financing at home and have no financing channels abroad, which affects their ability to go global. It is difficult to recover funds from overseas contracted projects. Due to the influence of foreign exchange control and project progress, it is difficult to recover the funds from some overseas contracted projects, which affects the overall performance of some international project contractors. 3 )  W O R K P L A N F O R 2016

Guangxi will earnestly and fully put into action the guiding principles of the 18th CPC National Congress and the third, fourth and fifth plenary sessions of the 18th CPC Central Committee on going-global, and effectively implement the central government’s policies on supporting the equipment manufacturing industry to go global and increasing financial support for going-global. Guangxi will actively participate in the BRI and the upgrading of the China–ASEAN Free Trade Zone, constantly improve the OFDI promotion system, increase financial support for the establishment of bases and industrial parks overseas, and pay more attention to the quality of outward investment. It will expand the overseas project market, promote international cooperation in agriculture and manufacturing, put more effort in the construction of overseas industrial parks, and ­continue making positive contributions to the Malaysia–China Kuantan Industrial Park, the China–Indonesia Economic and Trade Cooperation Zone, the SAIC-GM Wuling Indonesia Manufacturing Base, the China–Cambodia Agriculture Promotion Center and other major overseas projects. Additionally, it will strengthen overseas production safety management, ensure the safety of overseas assets, and enhance the capacity and potential to deal with the TPP. First, Guangxi will promote the introduction of policies and measures to support enterprises in going-global to establish bases and parks, and guide enterprises to expand the scale and quality of outward investment. Learning from Ningbo’s experience and measures in supporting the construction of “three major bases” including overseas production and manufacturing base, trade and marketing base or resource development base, Guangxi will bring forth new ways of overseas investment and cooperation, and will promote the issuance of special policies such as the Administrative Measures for Overseas Parks and Bases at Guangxi Autonomous Region Level, the Policy of Guangxi Zhuang Autonomous Region on Supporting the Construction of Overseas Parks and Bases to support enterprises to go global in groups and exert the effect of agglomeration. Taking advantage of the opportunities of the state’s supporting equipment manufacturing industry in going-global and providing greater financial support to going-global, Guangxi will actively direct well-positioned enterprises to strengthen overseas market investigation and expand the scale of going-global efforts. It will support and encourage powerful enterprises to expand overseas markets, focus on developing project contracting markets in

194  Development overview Africa, ASEAN, Latin America, etc., and undertake more projects in connection with interconnection, housing, municipal works and oil pipelines. It will enhance cooperation in agriculture and mineral resources with resource-rich regions such as ASEAN and Africa, support qualified manufacturing enterprises and agricultural enterprises in establishing production bases abroad, improve the project’s ability to promote exports, and attach importance to the income and quality of enterprises in outward investment. Second, Guangxi will make new progress in its major projects in the ASEAN, and conduct in-depth exploration of the ASEAN market. To this end, it will encourage the Malaysia–China Kuantan Industrial Park, iron and steel project in Kuantan Industrial Park and Kuantan Port, and provide more convenient services for enterprises in terms of certificate application, financing, investment promotion and publicity. Efforts will be made to promote investment in the China–Indonesia Economic and Trade Cooperation Zone, and assist the Cooperation Zone with the confirmation and assessment by the Ministry of Commerce. Guangxi will step up the construction of the SAIC-GM Wuling Manufacturing Base in Indonesia and the “One Region Multi-Park” of the China–Cambodia Agriculture Promotion Center. It will strengthen overall planning, broaden channels for cooperation, urge enterprises to strengthen connection with parks, and attract enterprises to enter the park to build factories. It will build a China–ASEAN Cooperation Park brand and drive relevant industrial enterprises to carry out investment cooperation in relevant countries. Third, Guangxi will provide better financing services for enterprises goingglobal under the BRI. It will strengthen the research on problems in financing for enterprises going-global under the BRI, and promote the establishment of a unified service platform and project base for Guangxi’s using such channels as the Asian Infrastructure Investment Bank, New Development Bank BRICS, Silk Road Fund and China–ASEAN Investment Cooperation Fund to go global, thus providing professional assistance for enterprises in the aspects of financing consultation, information service, financing project utilization and financing business handling. Guangxi will encourage cooperation between government, banks and enterprises, and make efforts to solve the financing difficulties encountered by going-global enterprises. It will strengthen contacts with the Export-Import Bank of China, China Development Bank, Industrial and Commercial Bank of China, HSBC, China Export & Credit Insurance Corporation and other financial and insurance institutions to further smooth the channels for cooperation between banks and enterprises. It will provide support for enterprises in obtaining loan support through domestic and overseas financial and insurance institutions and reduce the financing cost. Fourth, the building of a comprehensive service platform for overseas risk prevention will be enhanced. Guangxi will encourage enterprises to participate in overseas project insurance, strengthen risk prevention and control, and act deeply upon its overseas asset risk prevention plan. It will solicit greater financial support from its government finance, and strengthen the construction and policy research on a comprehensive service platform for overseas asset risk

Regional investment analysis report 2015  195 p­ revention. It will further intensify the overseas risk education of enterprises, support the cooperation of overseas investment and project contracting enterprises with China Export & Credit Insurance Corporation, insure overseas projects, and guard against the risks of overseas projects. It will increase insurance support for expatriate workers under overseas investment, and require full insurance coverage of all expatriate workers. Fifth, active actions will be taken to explore the international project contracting market. Guangxi will actively mobilize enterprises to participate in interconnection infrastructure development under the BRI, and continue to encourage their participation in the construction of the road interconnection project and pan-Beibu Gulf offshore channel between Guangxi and Vietnam. Enterprises will be backed up to continue exploration in development of the project contracting market in Africa, ASEAN, Latin America and other countries, and to contract more projects in housing, municipal works, and oil pipelines. Sixth, the impact of TPP on outward investment and cooperation of Guangxi will be analyzed. An in-depth analysis will be conducted over the impact of TPP on overseas investment cooperation in Guangxi in the future, especially the possible changes in investment cooperation with Vietnam and the countermeasures to be taken. 2 Sichuan (1)  Inward and outward investment of Sichuan in 2015 In 2015, in the face of the complex and austere situation in which the downward pressure on the international and domestic economy continued to increase and the arduous and heavy task of domestic reform, development and stability, Sichuan Province earnestly put into action the decisions and arrangements of the CPC Central Committee and the State Council for stable growth. Remaining committed to the underlying principle of pursuing progress while ensuring stability, Sichuan actively adapted itself to the new normal of economic development, and made active efforts to build itself into a strategic hub and core area for the combined development of the BRI and the Yangtze River Economic Belt and speed up the development of a strategic commanding height for the opening-up of the inland areas of China by virtue of the national pursuit for expansion of inland opening-up, opening-up along the Yangtze River, opening-up along the borders and the implementation of the strategy to open up toward the west. With these Sichuan made new achievements in building an open economy. 1 )  U T I L I Z A T I O N O F F O R E I G N C A P I T A L

In 2015, the foreign investment utilization in Sichuan remained stable at around US$10 billion, with an actual amount of investment amounting to US$10.437 billion, of which FDI was US$10.066 billion and contractual investment was

196  Development overview US$3.64 billion, an increase of 20.5%. There were 319 new foreign-invested enterprises, up 13.93%; and the foreign preferential loans utilized totaled US$17.661 million. Financial aid from the Hong Kong SAR and the Macao SAR registered US$194 million. The driving forces of foreign investment on the economy diversified. In 2015, 34 countries and regions set up new enterprises in Sichuan, and enterprises from 22 countries and regions had actual investment in the province. The Hong Kong SAR, Singapore and Taiwan, China, took dominating positions and their investment combined accounted for 80.8% of the total foreign capital utilization of the province, including US$6.707 billion from the Hong Kong SAR. European countries, such as the United Kingdom, France, Germany and Italy, witnessed hikes in their investment in Sichuan. Specifically, Germany’s investment increased by 748.3 times, the Netherlands’ by 14.7 times and Italy’s by 5.7 times. The US investment in Sichuan stood at US$112 million, down by 48.5% year-on-year along a downward path, but the contractual investment from the US registered US$203 million, an increase of 62.3%. The industrial distribution of foreign investment remained relatively stable. In 2015, the service sector actually utilized US$5.3 billion of foreign capital, accounting for 52.7% of the total, and the contractual investment in the sector amounted to US$2.23 billion, accounting for 61.3% of the total. The service sector, therefore, remained in the leading position. The foreign investment actually used in the real estate industry was US$3.94 billion, representing 74.3% of the total in the service sector. Wholesale and retail sales, leasing and business services, information transmission, computer services and software became the focus of foreign investment, with the number of new enterprises standing at 69, 59, and 36 respectively, making up more than half of the total approved throughout the year. The utilization of foreign investment in manufacturing remained stable, with the actual utilization of foreign capital standing at US$3.312 billion, down 4.36%, and the contractual investment at US$1.016 billion, down 3.35%. Prior work is in progress for the post-disaster recovery and reconstruction project in areas stricken by the April 20, 2013, Lushan earthquake, funded by foreign preferential loans. The Agence Française de Développement (AFD) already started granting funds and technical aids and working to refine the feasibility study report. The post-earthquake reconstruction project in Lushan funded by World Bank loans started its official assessment. The Saudi Fund for Development and Kuwait Fund project saw the feasibility study report completed. The general loan project progressed smoothly. The Sichuan small town development project and Wudu diversion irrigation project (Phase II) supported by World Bank loans progressed faster. Negotiation was completed with agreements for the World Bank loans to support infrastructure construction for Guang’an Sichuan-Chongqing cooperation demonstration zone project and the Phase VI poverty alleviation project in Sichuan. Both projects were officially implemented. The procurement for the project of Neijiang Vocational & Technical College and the Third People’s Hospital of Guangyuan financed by Israeli government loans was completed. The Chengdu Seventh People’s Hospital ­

Regional investment analysis report 2015  197 project financed with German promotional loans commenced the bidding process. The Ziyang Third People’s Hospital Project financed with OFID loans entered into the phase of third-party evaluation and feasibility study. The enthusiasm of enterprises to borrow international commercial loans continuously rises, and enterprises such as New Hope Group and Sichuan Airlines received US$150 million of commercial loans. 2 )  O V E R S E A S I N V E S T M E N T

In 2015, Sichuan’s outward investment and cooperation continued to show momentum for rapid development, and the enthusiasm of enterprises to go global was enhanced. Up to 145 new enterprises made overseas investment, an increase of 10.7% year-on-year. Investment from the Chinese side in projects filed with provincial authorities totaled US$2.83 billion, up 2.2 times year-onyear. There were 29 overseas investment projects filed with the development and reform departments, with a total outward investment of US$1.568 billion, up 84.5% year-on-year. M&A was still the main form of overseas investment adopted by Sichuan enterprises, and most investors were private enterprises. For example, New Hope Group, Kelun Industry Group, Tianqi Lithium and other enterprises took overseas investment as an important means to expand development space and build competitiveness. In terms of industrial distribution, energy and power, medicine, chemical industry, agriculture, game development, film and television, and culture are attracting more and more attention from enterprises. Overseas project contracting developed in an orderly manner. In 2015, Sichuan enterprises realized a turnover of US$5.46 billion, and a new contractual investment of US$4.53 billion, up 25.1%. Key projects such as the 1-millionkilowatt thermal power project of China Chengda Engineering Co., Ltd. with an investment of US$1 billion in Indonesia, the US$250 million coal power plant project of Western Power in Pakistan, the Belarusian rail transit capacitor project of Chengdu Road & Bridge Machinery Co., Ltd., and the hydropower project of Dongfang Electric Corporation in Laos were all in smooth progress. In the meantime, the contractual investment of new overseas projects in BRI countries totaled US$2.269 billion, accounting for 50% of the total. Projects including the Moscow–Kazan high-speed railway project of China Railway Eryuan Engineering Group Co., Ltd., the thermal power project of Dongfang Electric Corporation in Bosnia and Herzegovina, the city overpass project of Ranken Railway Construction Group Co., Ltd. in Chittagong, Bangladesh, and the China–Laos railway project of China Railway No. 2 Engineering Group Co., Ltd. were all progressing in an orderly way. 3 )  P R O B L E M S

i)  Gap with East China in foreign investment utilization widened. The growth of foreign investment utilization in Sichuan has encountered bottlenecks. The

198  Development overview actual foreign investment in Sichuan has been hovering around US$10 billion in recent years, mainly due to the lack of large projects and new growth points. In particular, the growth of foreign investment in the manufacturing industry has been sluggish, and the real estate industry which had been receiving a large proportion of the investment has also witnessed a decline. Investment from the Hong Kong SAR, Singapore, Taiwan of China, the United States and other traditional sources has experienced a decline to varying degrees, and new important sources have not yet appeared. Although the investment from some countries is increasing rapidly, the overall scale of foreign investment utilization in the province is relatively small, and substantial growth is not likely in the short run. ii) Lack of highlight in going-global. Sichuan enterprises have become more and more enthusiastic in going-global. Both the number of enterprises who have done so and the amount of investment they have made are on the rise, but some restrictive factors still exist. First, some enterprises still invest blindly and only pay attention to the project itself, not the overall industrial conditions and risk profile of the host countries. Second, most projects have a small investment scale, which is scattered in terms of both industry and country. Third, enterprises still go global alone, making it difficult to form synergy and guard against risks. This is why some projects progress slowly or even stagnate. Fourth, financial support is still too weak to enable private enterprises to be placed at the same financing position as state-owned enterprises. Fifth, limited by their own strength, information channels and cooperation methods, it is difficult for private enterprises to participate in major projects promoted and implemented at the national level. (2)  Progress in the implementation of the BRI Since the BRI was proposed, Sichuan has seized the opportunity, made active moves to plan, set targets, establish mechanisms, and clarify ideas and key points for the promotion of relevant work to practically advance the BRI. With these, Sichuan achieved positive results. First, the province paid attention to overall planning and establishing mechanisms. The Sichuan Provincial People’s Government set up a leadership group to promote the implementation of the BRI, established a sound working mechanism for the leadership group and its office, and pushed forward all key tasks in good coordination. The provincial departments and cities and prefectures have also worked out corresponding working mechanisms according to their actual conditions, thus forming a good vision under which all parties concerned jointly advance the BRI across the province. At the same time, according to the rolling mechanism of having one batch of projects in progress, one batch in reserve, and one batch being planned, the province established a key project database at the provincial level, and promotes work in all aspects based on it. Sichuan submitted more than 120 project proposals to the national authorities responsible for the implementation of the BRI, involving a total investment of over RMB1 trillion.

Regional investment analysis report 2015  199 Second, Sichuan put the emphasis on key points and launched forceful ­ easures. In accordance with national plans and requirements and in light of its m actual conditions, Sichuan worked out an implementation plan for its participation in the BRI implementation. In addition, it put forward 24 measures from the perspective of road connectivity, economic and trade cooperation, industrial development, financial cooperation, people-to-people and cultural exchanges, and institutions and working mechanisms for opening-up, and formulated policies and measures such as “251 Three-Year Action Plan” for the BRI, Plan for the Manufacturing Industry to Participate in the BRI, and implementation plan for foreign affairs. To be stage-specific and pertinent in doing relevant work, the 2015–2016 Key Work Plan was formulated in detail. A further 46 priorities were identified for 2015 and are now proceeding in an orderly manner. Third, the province emphasizes projects to promote cooperation. Centering on national plans, Sichuan, on the basis of projects, made great efforts to develop an Air Silk Road, build an international channel to and from Sichuan, and promote investment, trade and cultural exchanges. As a result, its exchanges and cooperation with the BRI countries and regions have continued to expand. The construction of Chengdu Tianfu International Airport commenced in an allround way, major railway and highway projects were further promoted; and a number of domestic and foreign industrials parks built through cooperation with Germany, France, the Republic of Korea and Singapore witnessed concrete progress. The China–Europe Railway and China–Asia Railway starting from Chengdu are in stable operation. The China–Europe railway (Chengdu line) extended from Lodz, Poland, to Nuremberg, Germany and Tilburg, Netherlands. By the end of June 2015, the China–Europe railway (Chengdu line) had run 334 round trips, making Sichuan one of the provinces in China to have run the largest number of China–Europe trains, playing an active role in encouraging Sichuan enterprises to participate in the international division of labor and the development of international markets. The number of foreign consulates in Sichuan reached 15, including eight of BRI countries. Additionally, it formed partnerships and launched cooperation with 207 cities across the world, and the province now flies a total of 89 international and regional air routes. In 2015, the trade volume of Sichuan with BRI countries reached US$13.83 billion, and the contractual investment from BRI countries tripled; the turnover of projects contracted in BRI countries increased by 30%, accounting for 61.8% of the total; the province’s outward investment increased threefold to US$880 million. (3)  Major ideas for future work Sichuan shall take the initiative to adapt itself to, comprehend and lead the new normal of economic development, make further efforts to break through the bottlenecks and stride over obstacles in the development of an open economy, and value the driving force of comprehensive innovation and reform. It shall move faster to enhance the depth and breadth of opening-up, deeply integrate itself

200  Development overview into the international division of labor and cooperation, actively build itself into a strategic hub and core area for the coordinated development of the BRI and the Yangtze River Economic Belt, and speed up the building of a strategic highland for the opening-up of the inland areas of China. 1 )  C O N T I N U E T O T A K E O V E R T R A N S F E R R E D I N D U S T R I E S A S A DIRECT WAY OF MAINTAINING STABLE GROWTH, ADJUSTING STRUCTURE AND PROMOTING TRANSFORMATION IN SICHUAN

Sichuan will accelerate the development of high-end opening-up carriers such as the China–ROK Innovation & Entrepreneurship Park, the China–Germany Innovation Industry Cooperation Platform, and the China–France Chengdu Ecological Park, and work hard to build an important platform to undertake transferred industrial facilities. It will introduce a number of enterprises with global influence from Europe, America, Japan, the Republic of Korea, the Hong Kong SAR and Taiwan of China to carry out industrial and technological cooperation in key industries identified by the province. In line with its industrial advantages and development needs, Sichuan will continue to intensify investment attraction efforts in the eastern coastal areas of China, constantly explore new sources of investment, and attract large and high-quality foreign investment projects from key enterprises. The province will make great efforts to improve the environment for attracting foreign investment and pay more attention to the service for major projects. 2 )  G I V E T O P P R I O R I T Y T O C O O P E R A T I O N I N I N T E R N A T I O N A L PRODUCTION CAPACITY AND EQUIPMENT MANUFACTURING IN SICHUAN’S OVERSEAS ECONOMIC OPERATIONS

Taking the opportunity of the establishment of a commission–province collaboration mechanism for pushing forward international capacity cooperation between the National Development and Reform Commission and Sichuan Province, Sichuan will strive to participate in international capacity and equipment manufacturing cooperation, and regard it as the top priority in Sichuan’s goingglobal efforts. In combination with the industrial development basis, the status quo of advantageous surplus capacity and the target of structural adjustment, efforts are made to establish a demonstration province for cooperation in international capacity and equipment manufacturing cooperation in Central and West China. The province will further strengthen the overall coordination of international capacity and equipment manufacturing cooperation, formulate specific support and incentive policies, and accelerate the establishment of special financial funds. It will improve financial service support, and increase support and efforts to make breakthroughs in some key projects of international production capacity and equipment manufacturing cooperation in the province. Qualified enterprises will be encouraged to build overseas agricultural cooperation zones, food industry demonstration parks, medical and chemical industry clusters and energy and mineral industry clusters in BRI countries and some African countries. The

Regional investment analysis report 2015  201 province will increase communication and coordination with relevant ministries and commissions at the national level, and support Sichuan enterprises to take an active part in major international capacity cooperation projects promoted by the state and major equipment export projects in connection with railway and power facility construction initiatives. 3 Chongqing (1)  Recent policies of Chongqing to promote inward and outward investment First, Chongqing fully implemented the guiding principles of the Third Plenary Session of the 18th Central Committee of the CPC on exploring the implementation of the system of pre-establishment national treatment plus a negative list across the board for foreign investment. It did not formulate a separate document for this purpose. The city issued the Administrative Measures for the Approval of Investment Projects of Chongqing Enterprise and Administrative Measures for the Filing of Investment Projects of Chongqing Enterprise. Second, in accordance with the Administrative Measures for the Approval and Filing of Overseas Investment Projects (NDRC Decree No. 9), Chongqing issued the Administrative Measures for the Approval and Filing of Overseas Investment Projects in Chongqing (YFF [2014] No. 64) to help enhance overseas investment facilitation for Chongqing enterprises. (2)  Utilization of foreign investment and overseas investment of Chongqing in 2015 1 )  G R O W T H I N T O T A L I N W A R D A N D O U T W A R D I N V E S T M E N T

In 2015, there were 315 new foreign-invested enterprises in Chongqing, up 26.00% year-on-year; the contractual foreign investment was US$4.817 billion, a rise of 4.12% year-on-year; the actual utilization of foreign capital was US$10.765 billion, a year-on-year growth of 1.28%. In 2015, Chongqing approved 99 new projects with a total contractual overseas investment of US$1.61 billion, an increase of 66.6% year-on-year. Specifically, there were 84 overseas projects of private enterprises (institutions), with the contractual investment contract accounting for 92.0% of the total; and 14 overseas projects of state-owned enterprises, with the contractual investment accounting for 8.0% of the total. Chongqing’s total outward investment was US$1.42 billion, up 27.9% year-on-year, of which the investment of private enterprises and stateowned enterprises made up 80.4% and 15.7% of the total respectively. 2 )  S T R U C T U R E O F I N W A R D A N D O U T W A R D I N V E S T M E N T

i)  Structure of foreign investment utilization. In 2015, foreign investors from 37 countries (regions) invested in Chongqing. The top three were the Hong Kong

202  Development overview SAR, the Republic of Korea and Singapore. The top three contributors of the investment actually used were the Hong Kong SAR, the British Virgin Islands, and Singapore, and their paid-in capital combined accounted for 70.09% of the city’s total. The contractual investment in Chongqing’s secondary and tertiary industries were US$1,665.54 million and US$2,919.56 million respectively, representing 35.69% and 62.57% of the total respectively. The investment actually used by the secondary and tertiary industries was US$4,276.5973 million and US$5466.9565 million respectively, making up 43.88% and 56.10% of the total respectively. Contractual foreign investment mainly came for manufacturing, real estate and financial industries, which received, respectively, US$1,453.56 million (31.15%), US$1,002.13 million (21.48%) and US$941.80 million (20.18%). Actual utilization of foreign investment most occurred in the manufacturing industry, financial industry and real estate industry, which used, respectively, US$4,179.6708 million (42.89%), US$2,741.4231 million (28.13%) and US$1,610.5515 million (16.53%) of foreign capital. ii) Structure of overseas investment. In 2015, Chongqing’s contractual overseas investment went to 31 countries (regions) in the world. Specifically, the Hong Kong SAR got US$822.96 million (51.1%), Pakistan US$200 million (12.4%), Malaysia US$151.40 million (9.4%), the United States US$97.37 million (6.1%), the Macao SAR US$88.71 million (5.5%) and Luxembourg US$65.60 million (4.1%). Other countries (regions) receiving investment from Chongqing were the British Virgin Islands, Seychelles, Kyrgyzstan, Canada, Thailand, Cambodia, Indonesia, Germany, the Republic of Korea, Egypt, Taiwan of China, Kazakhstan, Denmark, Turkey, Ecuador, Italy, Mongolia, Netherlands, Brazil, Australia, Myanmar, the Philippines, Vietnam, Tanzania, and Laos. The top three industries that received the most outward investment from Chongqing were other financial industries, which received US$738.10 million (45.9%); the power and heat production and supply industry, which received US$202 million (12.6%); and the real estate industry, which received US$197.64 million (12.3%). A total of 39 countries (regions) received actual outward investment from Chongqing, mainly the Hong Kong SAR, which received US$1,114.92 million (78.3%), Russia US$63.03 million (4.4%), the United Kingdom US$30.65 million (2.2%), Liberia US$30.38 million (2.1%), Uganda US$26.37 million (1.9%), Timor-leste US$25.33 million (1.8%), Kenya US$18.15 million (1.3%), and Canada US$15.57 million (1.1%). Other destination countries (regions) were Vietnam, Malaysia, the United States, Laos, the British Virgin Islands, Benin, Japan, the Macao SAR, Venezuela and Australia. The top three industries invested in by Chongqing enterprises were other financial industries, which received US$597.84 million (42.0%), retail sales, which received US$342.52 million (24.0%), and business services, which received US$90.82 million (6.4%).

Regional investment analysis report 2015  203 3 )  P R O B L E M S I N I N W A R D A N D O U T W A R D I N V E S T M E N T

i)  Low stability. In 2015, the foreign investment utilized by Chongqing was going down throughout the year. It was only in December, when US$2.9 billion of foreign investment finally came in, that Chongqing ultimately managed to basically realize its goal of using US$10 billion of foreign investment in the year. The growth rate of FDI was lower than the national average by 17 percentage points, and presented violent fluctuations. The reasons are as follows: First, as the country quickens the implementation of the BRI and the strategy of the Yangtze River Economic Belt development, Chongqing welcomed development opportunities, but the benefit actually swept Central and West China and all relevant provinces competed for resource and opportunities to drive their opening-up. Second, the expansion of China (Shanghai) Pilot Free Trade Zone and the establishment of the Tianjin–Guangdong–Fujian Free Trade Zone have increased the appeal of the eastern coastal areas of China to foreign investors, which will hamper the foreign investment attraction work of Chongqing and other western regions for some time. Third, over the past three years, the contractual foreign investment in Chongqing was lower than the amount actually used, indicating that the reserve of intentional investment projects is limited in the first place and lends weak support for growth of foreign investment in the years to come. Fourth, the structure of foreign investment is in transition. Foreign investment is shifting from cost-oriented investment aiming at low production or operation cost to market-oriented investment. Investment in new hot industries such as producer services is characterized by light asset operation. In addition, the 10 strategic emerging industries are in the initial stage of development, and the new growth points for attracting foreign investment have not yet come into being. ii)  More guidance and help needed for private enterprises to go global. With the increasing enhanced strength of private enterprises and the increasing ­government support for “going global” private enterprises, the dominant position of state-owned enterprises in OFDI has been gradually replaced by private enterprises. However, private enterprises face more difficulties and are prone to vicious competition in going-global as they lack long-term strategic planning and risk awareness to a large extent, understanding of the investment environment and culture of the host country, and experience in overseas investment management. Therefore, it is necessary to further strengthen the guidance and help for private enterprises to go global. 4 )  T R E N D S A N D P R O S P E C T S F O R 2016

Chongqing’s all-round, multi-tiered and wide-ranging opening-up system plays an important role in positively and strongly supporting the city’s opening-up. First, the launch of the China–Singapore (Chongqing) strategic coordination demonstration project will directly promote open cooperation in such areas as financial services, aviation, logistics and information and communication technologies in Chongqing, and indirectly serve national strategies such as the BRI and the Yangtze River Economic Belt development. The effect of coordinated development will

204  Development overview appear. Second, the policy system and institutional environment of the “1 + 2 + 8 + 36” open platform are more complete. As the five special actions concerning international logistics channels, the port economy and the service trade of C ­ hongqing continued to deepen, and the unique opening-up advantages of “three trinities” are unveiled, the ability of open platforms to attract foreign investment will be strengthened. Integrating the development plan of Chongqing’s five functional areas into the BRI will provide a new opportunity and platform for C ­ hongqing to attract foreign investment. Third, Chongqing will build a foreign trade service platform around the Strategic Cooperation Agreement on Supporting Enterprises to Go Global, vigorously promote and serve export-oriented enterprises to go global, and improve the work system for the going-global strategy. Fourth, enterprises will be encouraged to participate in overseas infrastructure development and international capacity cooperation, and support will be provided for the transfer of advantageous enterprises such as automobiles, motorcycles and machinery manufacturing to overseas to expand overseas markets. The combination of these policies and measures will actively promote the future development of inward and outward investment of Chongqing. (3)  Investment in and from BRI countries in 2015 In 2015, investors from four BRI countries, i.e., Singapore, the Philippines, Belarus and Thailand invested in Chongqing, and the total actually utilized investment was US$705.5503 million. Chongqing enterprises made US$131.49 million of actual outward investment in 12 BRI countries (regions), specifically US$63.03 million (47.9%) in Russia, US$25.33 million (19.3%) in Timor-Leste, US$14.48 million (11.0%) in Vietnam, US$13.65 million (10.4%) in Malaysia and US$11.96 million (9.1%) in Laos. Other countries (regions) receiving investment from Chongqing were Indonesia, Cambodia, Turkey, Kuwait, the United Arab Emirates, Pakistan and Georgia. 4 Guizhou (1)  Recent policies of Guizhou to promote inward and outward investment In February 2016, Guizhou Provincial Leading Group Office of Investment Promotion and Opening-up and Guizhou Provincial Department of Commerce jointly issued the Circular on Issuing the Guiding Opinions on Accelerating Integration into the Belt and Road Initiative and Implementing the Going Global Strategy (QZSLDXZF [2016] No. 1), which clarified the significance and overall objective of implementing the going-global strategy, and the requirements for strengthening the policy support and service support, strengthening risk control and assessment system and other aspects. It aims to accelerate the going-global of Guizhou enterprises and further enhance the province’s economic and technological cooperation with foreign countries.

Regional investment analysis report 2015  205 (2)  Inward and outward investment of Guizhou in 2015 1 )  U T I L I Z A T I O N O F F O R E I G N C A P I T A L

In 2015, the total amount of foreign investment used in Guizhou was US$2.524 billion, up 22.22% year-on-year. Up to 187 foreign-invested projects were approved, up 8.72% year-on-year, including 75 new foreign-invested enterprises and 111 new branches. The investment in the primary, secondary and tertiary industries was US$34 million, US$1,339 million and US$1,151 million, accounting for 1.35%, 53.03% and 45.62% of the total, respectively. The top three sources were the Hong Kong SAR, the British Virgin Islands and Singapore, contributing US$1.427 billion, US$354 million and US$321 million of investment and accounting for 56.54%, 14.03% and 12.72% of the total investment actually used, respectively, making a total of up to 83.29%. In terms of the receiving cities and prefectures, eight cities and prefectures used more than US$100 million of foreign investment, namely, Guiyang, Qiandongnan Miao and Dong Autonomous Prefecture, Liupanshui, Qiannan Buyei and Miao Autonomous Prefecture, Bijie, Zunyi, Qianxinan Buyei and Miao Autonomous Prefecture and Anshun. They respectively received US$927 million, US$224 million, US$212 million, US$203 million, US$180 million, US$156 million, US$122 million and US$121 million of actual investment, totaling US$2.396 million or 94.92% of the total. 2 )  O V E R S E A S I N V E S T M E N T

In 2015, the overseas economic and technological cooperation of Guizhou involved a total of US$809 million in outward investment, up 61.39% year-onyear. The total turnover of overseas contracted projects was US$677.56 million, an increase of 35.16%; the net OFDI was US$131.4882 million, a year-on-year increase of 30.28%; a total of 6,733 workers were dispatched for international labor cooperation. Guizhou Sanxin Investment Development Co., Ltd. and 14 other enterprises invested in 12 countries and regions to establish overseas companies and institutions. These destination countries and regions include Australia, Saudi Arabia, Tunisia, the British Virgin Islands, the United States, and others and projects were in agriculture, construction, machinery, power, mining, real estate development, catering, and other industries. The total contractual investment was US$185 million, a decrease of 63.53% year-on-year. The net OFDI amounted to US$131 million, a year-on-year increase of 30.28%. The total turnover of overseas contracted projects stood at US$677 million, a year-on-year increase of 35.16%, and the total value of new contracts was US$576 million, a year-on-year decrease of 6.77%. Guizhou Bridge Design Institute Co., Ltd. and another Guizhou enterprise obtained qualifications for international project contracting. At present, the projects contracted by Guizhou enterprises cover 49 countries and regions.

206  Development overview A total of 6,733 workers of various kinds were dispatched accumulatively and three new provincial-level foreign labor training bases were approved, respectively at Liupanshui Ethnic Vocational and Technical School, Xingren County Ethnic Vocational and Technical School and Guizhou Tongtu Labor Service Cooperation Ltd., making a total of seven labor training bases in Guizhou. (3) Problems 1 )  U T I L I Z A T I O N O F F O R E I G N C A P I T A L

Generally, the scale of foreign investment utilized in Guizhou is still small. In recent years, great progress has been made in the utilization of foreign investment in Guizhou, with an increase of 8.6 times over that in 2010, but the overall scale is still small, accounting for only about 1.6% of the province’s GDP. In 2015, the actually used foreign investment in Guizhou accounted for about 2% of the total of China, and the utilization of foreign investment still does not play a significant role in driving the economic development in the province. The industries using foreign investment are mostly low-end ones. Enterprises utilizing foreign investment in Guizhou are mainly engaged in the primary processing of resources, with a short industry chain and narrow scope. The traditional industries with low added value still occupy a large proportion, and there are few technology- and capital-intensive projects. In particular, Guizhou lags far behind other provinces in China in the introduction of highend production facilities and R&D institutions, the industrial agglomeration and connection is quite limited, the industrial support capacity is poor, and the industry chain is short. 2 )  O V E R S E A S I N V E S T M E N T

Generally, the world economy was sluggish with a slow recovery, and the global growth rate would be 3.1% in 2015, 0.3 percentage point lower than in 2014 and a record low since 2009 according to the latest projections of the International Monetary Fund. International demand shrank, resulting in a fall in commodity prices. Sluggish domestic demand in emerging and developing countries has caused capital outflows and a further slowdown in economic growth. The aftermath of the Ebola outbreak in Africa and the deep adjustment of industries centered on metal and other mineral resources have increased the difficulties and risks for enterprises to go global. At home, China is also in a difficult period of development. The economic growth geared down, industrial development entered a painful period of structural adjustment and the impact of earlier economic stimulus policies is being absorbed. This has prompted various deep-seated contradictions and problems. The economy has entered a new normal with mounting downward pressure. This has a negative impact on the overseas investment and economic cooperation of Guizhou in terms of projects and funding.

Regional investment analysis report 2015  207 There is a shortage of funding for going-global. To push enterprises to go global, great support of funds and policies is required for intermediary services, prior investment and financing, and to ensure the liquidity of overseas funds and secure credit support, risk prevention, cross-border settlement, and the insurance letters of insurance. At the same time, the implementation of infrastructure PPP projects in Africa and Southeast Asia requires enterprises to go global not only with funds but also with management and operational experience. Private enterprises have gradually become the main force in the going-global campaign, given that the existing project contracting enterprises are facing great challenges in funding and management. Yet policy support and financing difficulties still need to be addressed. Only a limited number of entities are going global and guidance and publicity are not enough. Guizhou failed to offer sufficient policy support and guidance regarding the development philosophy for going-global and the result is that only a limited number of local enterprises are going global. Most enterprises in Guizhou still give no thought to the idea of international development. They have not realized the importance of overseas investment and the long-term value of exploring international markets. They also lack emphasis on innovation and enterprise, and easily feel content. Therefore, support, promotion and guidance from governments at all levels are required. Talents are in short supply for going-global. A small amount of experienced talents in the fields of professional technology, finance and economy, a lack of investment and financing platforms, and an acute shortage of professional legal and financial service institutions are the shortcomings that affect the goingglobal campaign of Guizhou Province. (4)  Plan for 2016 1 )  U T I L I Z A T I O N O F F O R E I G N C A P I T A L

i)  Creating new ways and widening the channels for investment attraction. First, Guizhou will actively attract investment in a targeted manner. Aiming at first-class high-tech enterprises and high-tech innovative startups at home and abroad, Guizhou will conduct in-depth study, improve the pertinence and success rate of investment attraction activities, and implement a batch of large and high-quality projects as soon as possible. Focusing on the five emerging industries, it will introduce a number of industrial projects with high technological content, high added value of products, high fiscal and taxation contribution rates and high employment rate. It will target Fortune Global 500 companies, renowned enterprises at home and abroad, and leading enterprises in various industries and strive to bring them in in clusters. Second, the province will rely on new areas, industrial parks, and opening-up platforms to attract investment. Guizhou will accelerate the construction of its “1 + 7” open innovation platform, “Five 100 Projects” as well as opening-up platforms such as the annual Eco Forum Global Guiyang, China (International) Wine

208  Development overview Expo and China International Big Data Industry Expo in Guiyang. It will actively explore new ways to undertake industrial transfer, attract investment in the leading industries of industrial parks, make efforts to introduce a number of large export-oriented enterprises with a strong driving force and wide connections to one another, and gradually form industrial clusters. Third, it will make use of modern investment attraction means. Guizhou will give full play to the leading role of big data in attracting foreign investment, use data to search, attract and serve businesses, and build professional databases. It will utilize global corporate data and market data to obtain timely investment information, and share the data of market, talents, funds and projects of Guizhou through the online platforms to attract foreign investors. Fourth, it will rely on existing businesses to attract other businesses and investment. Guizhou will support and serve the existing foreign-invested enterprises, for the purpose of promoting capital increment and investment attraction with the help of their resources and partnerships and prompting a secondary effect on investment attraction. Adopting new models such as M&A investment attraction, themed investment attraction, commissioned investment attraction, professional investment attraction, project promotion, door-to-door investment attraction and industry chain investment attraction, Guizhou will make efforts in exploration, thinking and innovation to eliminate the gap and make new breakthroughs in investment attraction. ii)  Emphasizing industrial upgrading and improving foreign investment structure. Compared with the previous years, the foreign-invested enterprises settling in Guizhou have gradually shifted from low-end industries to the high-tech industries. But there is plenty of room for foreign investment in areas such as information services, education and training, cultural creativity, consulting, high-end services and public facilities management. Taking the opportunity brought about by the transformation of the economic development model and structural adjustment in China, Guizhou will strive to introduce industries that can help improve the structure of its foreign investment and solve problems like the low level of industries utilizing foreign investment, low-end industry chains, and poor ability to attract intelligence. iii)  Improving services and business environment for project implementation. Guizhou will further simplify the approval procedures for investment projects, improve services, enhance efficiency, clarify responsibilities, and ensure that each investment project has a working group, a person in charge, as well as access to services throughout the project period. In order to constantly improve the supporting services, Guizhou will set up service centers and complaint and mediation centers for foreign-funded enterprises and vigorously develop various intermediary service organizations to provide high-quality legal, financial, insurance and environmental impact assessment services for foreign investors. Actions will be taken to strengthen management and supervision, ensure good market order, clarify policies and treatment for foreign investors, and create a stable policy environment and a relaxed development environment for foreign-invested enterprises.

Regional investment analysis report 2015  209 iv)  Institutional innovations and pilot programs for foreign investment management. Guizhou will make concrete efforts to achieve the goal of building 12 pilot areas for the reform of the foreign investment management system, and gradually improve the investment policy system with Guizhou characteristics, greatly facilitating foreign investment activities. In addition, the province will also make innovations regarding supervision for foreign-invested enterprises during and after project implementation, improve the full-cycle supervision system for foreign investment projects, and pursue better and faster development of the utilization of foreign investment with high-quality services. 2 )  O V E R S E A S I N V E S T M E N T

i)  Grasping the important opportunities brought about by the BRI and RMB’s inclusion in the SDR basket so as to speed up the pace of going-global. Guizhou will actively promote the going-global of industries with technological advantages such as phosphorus chemical, coal chemical, aluminum and hydropower industries and explore the BRI market through project contracting and the export of technologies. Support will be provided to capital- and technology-intensive industries such as mining machinery, agricultural machinery, construction machinery, power equipment, railroad cars and spare parts, to gradually expand overseas investment. Industries with excess capacity such as cement, steel and metallurgy will be encouraged to transfer their capacity to BRI countries by buying shares with their production equipment. The finished products will mainly be sold to local markets in the host countries. Guizhou will also encourage overseas investment for the purpose of obtaining high-end factors, actively explore the establishment of R&D facilities in Southeast Asia, North America, Europe and Oceania, and build sales and service networks. ii)  Quickening the pace of fostering “going global” market players and releasing the vitality for outbound economic development. Guizhou will strengthen the linkage and division of responsibilities among departments and insist on developing simultaneously enterprises in different industries and of different ownerships, and give equal emphasis on enterprises in traditional industries and high-tech industries, large enterprises and small and medium-sized ones, so as to cultivate strong market players for the going-global campaign. The province will strengthen targeted guidance for enterprises going global, encourage and support enterprises of different ownerships, including qualified state-owned, private and foreign enterprises to participate in international economic and technological cooperation and international division of labor, and actively identify central enterprises and out-ofprovince large private enterprises with the potential to go global, and take active actions to communicate with them and provide services for them to make the move. iii)  Building the strategic cooperation alliance of overseas enterprises in Guizhou with concrete efforts. On the basis of the International Economic and Technical Association of Guizhou Province and the Agreement on Strategic Cooperation between Overseas Operating Enterprises in Guizhou Province,

210  Development overview Guizhou will actively promote the cooperation between state-owned and private enterprises in the province in going-global in clusters to explore international markets. Large enterprises in advantageous industries will be set as examples to promote cooperation among enterprises and push advantageous industry chains to go global. The province will encourage and guide the differentiated, featured and specialized development of enterprises, improve the allocation of resources, shape a reasonable division of labor system, and build its competitiveness in overseas economic cooperation. iv)  Establishing a service promotion system for key overseas investment projects and contracted projects above US$5 million in value. Guizhou will establish accounts for key overseas enterprises and projects such as China Railway No. 5 Engineering Group Co., Ltd. and Sinohydro Bureau 9 Co., Ltd., and provide tailor-made services and targeted guidance following the principle of “one enterprise, one strategy,” “one type, one strategy” and one-on-one service delivery, so as to encourage enterprises to invest abroad and undertake overseas projects, export complete sets of equipment and build overseas marketing networks without taking unnecessary risks. By doing so, the province will build a new pattern where traditional project contracting, projects under the investment account, export of ­complete sets of equipment, and overseas labor cooperation all make their due contributions to the development of overseas development of the province. v)  Building overseas windows and platforms for foreign economic cooperation and trade. To give full play to the leading role of key enterprises including overseas companies of China Railway No. 5 Engineering Group Co., Ltd., Sinohydro Bureau 9 Co., Ltd., Guizhou Maritime Silk Road International Investment Co., Ltd., Wengfu Group and the Seventh Metallurgical Consultation Group Co., Ltd., Guizhou plans to establish overseas information windows and commodity display platforms in Africa, Southeast Asia, India and Australia, keep close contact with local Chinese embassies and consulates, chambers of commerce and enterprises, track and summarize information of various foreign economic and trade development projects in and around the countries in real time. The province will explore the establishment of a permanent overseas representative office (liaison offices) to provide comprehensive services in the fields of information-sharing, security assessment, risk prevention, product display and sales for Guizhou enterprises, so as to further promote the integration of foreign investment, foreign trade and overseas business operation, and develop new competitive advantages in foreign trade. vi)  Intensifying talent training for going-global initiatives. Guizhou will put relevant enterprises in the central place, while the government will also participate and give guidance, to launch training programs to cultivate talents needed for enterprises to go global in cooperation with the Ministry of Commerce, China International Contractors Association and financial and taxation institutions in the province. It will also invite experts to give special business training courses

Regional investment analysis report 2015  211 for Guizhou enterprises from time to time every year, with a view to produce more high-caliber personnel, which are urgently needed. vii) Strengthening investigation on enterprises and improving the comprehensive coordination and service mechanism. Guizhou will further improve and bring into full play the service mechanism of the joint meeting on going-global. Every year, joint meetings on going-global will be held on an irregular basis so that all members can communicate and exchange information, study and solve major problems encountered in implementing the going-global strategy in the province. This will enhance awareness of cooperation and service delivery and create a good atmosphere for enterprises to go global and ensure smooth implementation of the going-global strategy. viii)  Providing financial support for enterprises to go global. Guizhou will actively strive to establish a special fund for the implementation of the going-global strategy so as to provide financial support for enterprises to go global. On the one hand, financial institutions will be encouraged to provide Guizhou enterprises with letters of guarantee, credit, financing, settlement, insurance and other financial support in the process of contracting overseas projects and making overseas investment on the basis of business operation. On the other hand, the branches and financial officers of financial institutions abroad will be mandated to play their role and provide information and consulting services for Guizhou enterprises in setting up companies or undertaking overseas projects. 5 Yunnan Inward and outward investment is an important means for developing countries to participate in economic globalization and international competition. The two are interdependent and supplementary to each other. Attracting foreign capital is an important basis for foreign investment. Absorbing foreign capital can help solve the domestic capital shortage, gain advanced technology and management experience, promote the integration of product sales channels with the international market, and create competitive advantages of domestic enterprises. Competitive advantages are the foundation and driving force for enterprises to make overseas investment. Outward foreign direct investment (OFDI) can bypass trade barriers, provide strategic resources and technical guarantee for the development of domestic economy, and it can also attract foreign investment, promote exports, build brands, and facilitate the participation in international competition and cooperation. Inward and outward cross-border capital flow can continuously promote a country’s economic development and its industrial restructuring and upgrading. In recent years, China has become an important force in international direct investment flow, and Yunnan Province has made great achievements both in absorbing foreign direct investment (FDI) and in outward foreign direct investment. However, problems remain in terms of the flow-stock structure, industrial distribution, regional structure and investment models of inward and outward investment in the province.

212  Development overview (1)  Recent policies of Yunnan to promote inward and outward investment Yunnan vigorously promoted infrastructure construction, deepened the reform of the administrative review and approval system, and enhanced its appeal to foreign investment with a well-functioning administrative, legal, and investment environment. It successively launched a series of policies, including the Opinions of the Investment Invitation Commission of Yunnan Province on Strengthening Investment Promotion in the Border Areas, the Implementation Measures of Yunnan Province to Strengthen the Introduction of Talents Based on Investment Promotion, Opinions of the Investment Invitation Commission of Yunnan Province on Working Harder to Promote the Steady Increase of Investment, and Opinions of Yunnan Provincial People’s Government on Promoting Cooperation on International Production Capacity and Equipment Manufacturing. With these in place, the policy system of investment invitation in Yunnan Province is improved greatly. At the same time, relevant departments of the province introduced policies in areas of industrial transformation and upgrading, private economic development, and attracting domestic and foreign R&D institutions and technology-based small and medium-sized enterprises, setting up a good policy platform for the introduction and implementation of foreign investment projects. (2)  Inward and outward investment of Yunnan in 2015 1 )  G R O W T H I N I N W A R D A N D O U T W A R D I N V E S T M E N T

Utilization of foreign capital: In 2015, under the strong leadership of the CPC Yunnan Provincial Committee and the People’s Government of Yunnan Province, all the prefectures, cities and relevant departments of the whole province actively adapted to the new normal of economic development, promoted reform on the basis of stable growth of the whole province, and made great efforts to come up with innovative working ideas and broaden investment channels. The province gave prominence to targeted investment attraction efforts, actively engaged in large-scale and quality investment promotion, vigorously promoted project implementation, pushed for cooperation intentions to turn into real contracts, strove to ensure project funding, and devoted all efforts to ensure sound utilization of foreign capital. There were 142 new projects approved in the province throughout the year, representing a 7.58% year-on-year growth, with the total contractual foreign investment amounting to US$2.26 billion, a yearon-year increase of 108.7%, and the actual use of foreign investment at US$2.99 billion (full-caliber figures), a 10.6% increase over the previous year, which is 4.2 percentage points higher than the national average and higher than the province’s target growth rate of the year. Sources of foreign investment diversified with investment coming from more than 50 countries and regions to Yunnan. The Hong Kong SAR contributed more than 80% of the total foreign investment in the province. The foreign investment structure in Yunnan is more

Regional investment analysis report 2015  213 reasonable with a gradual transformation from traditional industries to new manufacturing, modern services, public infrastructure construction and related areas. Foreign investment played a more prominent role in the economic growth and the improvement of the people’s livelihood across the province. Overseas investment: In 2015, Yunnan stepped up its efforts to streamline administration and delegate power in regard to foreign investment, and further improved the policy and service system for enterprises to “go global,” so as to maintain a high growth rate of overseas investment. By the end of 2014, a total of 635 enterprises in the province made a total of US$5.76 billion of outward investment. Among them, 103 were established in 2015 with a total outward investment of US$1.344 billion, a 30.4% year-on-year increase, ranking fourteenth in the country and third in West China. In 2015, Yunnan enterprises signed 95 new contracts for overseas projects, with a total contractual investment of US$12,86.38 million, a 4.29% decrease from the previous year. The turnover was US$2,341.62 million, a year-on-year increase of 13.1%, ranking seventeenth in the country. In 2015, Yunnan sent 10,398 workers abroad, a 12.7% increase over 2014. Among them, 7,348 people were sent for specific projects, accounting for 70.67% of the total; 775 people were sent under labor cooperation agreements, accounting for 7.45%; 2,275 people were sent for overseas investment, accounting for 21.88%; and mid- and high-end labor accounted for 6.8% of the total. 2 )  S T R U C T U R E O F I N W A R D A N D O U T W A R D I N V E S T M E N T

Foreign capital utilization: The scale and quality of the utilization of foreign capital was continuously improved. In 2015, Yunnan witnessed stable growth in major foreign investment indicators thanks to the effective implementation of policy measures such as attracting large and high-quality investment, promoting the signing of project contracts and ensuring project funding. The FDI growth rate was 3.1 percentage points higher a year earlier, returning to a ­double-digit growth rate. Contractual foreign capital showed the fastest growth in the last 10 years, providing a good foundation for promoting the quality and quantity of FDI in the coming year. Meanwhile, the average contractual foreign investment of new single projects was US$15.9 million, a 94% year-on-year increase and the highest in the last 10 years. To sum up, the quality of foreign capital utilization in the province was further improved. Efforts to attract large and quality investment projects were very effective. In 2015, the efforts saw solid progress. Yunnan Province and China Resources (Holdings) Co., Ltd. signed a new strategic cooperation agreement to comprehensively deepen the cooperation in healthcare, real estate, new energy, cement, and other fields, and made a smooth progress. Cooperation between KISC Cement and China Resources Cement entered the implementation stage. Yuntianhua Group and Israel Chemicals set up a joint venture, Haikou Phosphorus Co., Ltd. under Yunnan Phosphate Chemical Group with a total investment of US$450 million. It was the largest joint venture project of Yunnan Province in

214  Development overview the year. Wal-Mart, Coca-Cola, Starbucks and other large international enterprises who had already settled in the province also expanded their investments. The industrial structure of Yunnan’s investment was further improved. In 2015, Yunnan Province made more efforts to attract industrial investment, with the actual utilization of foreign capital in the secondary industry accounting for 40.4% of the total foreign investment of the province, a 0.4 percentage point year-on-year increase. Specifically, the production and supply of power, gas and water contributed 20.3% of the investment, 14 percentage points higher than the previous year, which was the largest increase among various industries. The proportion of FDI in the primary industry increased by 0.2 percentage point over the previous year, and investment in the featured plateau agriculture increased. In the service sector, wholesale and retail sales contributed 9.6% of foreign investment in the province, up 5.3 percentage points year-on-year; the contribution of the financial industry saw a 0.8 percentage point year-on-year increase, and the real estate industry’s contribution dropped by 5.6 percentage points year-on-year. ASEAN countries’ investment in Yunnan Province increased rapidly. In 2015, in an effort to build the province into a central place for reaching out to South Asia and Southeast Asia, Yunnan Province took more targeted measures to attract investment in key areas. Up to US$110 million came from ASEAN countries, representing a 198% year-on-year increase, and accounting for 4.5% of the total foreign investment in the province. The total contractual foreign investment was US$170 million, a 194% increase from the previous year, accounting for 8.4% of the total amount of the province. Singapore and ­Malaysia, in particular, made greater contributions. At the same time, the Hong Kong SAR remained the largest source of foreign capital for Yunnan Province, contributing US$1.74 billion, a 12% year-on-year increase, accounting for 73% of the total amount of the province. In addition, European countries like the UK and the Netherlands also invested more in the province. More foreign capital flowed to key industrial parks. In 2015, Yunnan Province took the initiative to promote to attract investment to various industrial parks, and key parks played a better role as platforms and carriers of institutional innovation, science and technology guidance, industrial agglomeration and intensive land use, showing great appeal to foreign investment. FDI in state-level development zones such as the Kunming High-tech Industrial Development Zone, Kunming Economic and Technology Development Zone, Dianchi Kunming Resort and Dali Economic and Technology Development Zone reached US$990 million, accounting for 32.9% of the total amount of the province. Some prefectures and cities saw sharp FDI increases. In 2015, most of the prefectures and cities in Yunnan Province made active and effective use of foreign capital, and there was a good momentum in attracting foreign capital. Kunming continued to play a prominent role in promoting the utilization of foreign capital across the province, with its FDI amounting to nearly US$2.19 billion, a 9.1% year-on-year increase, which accounted for 73.4% of the total FDI of the

Regional investment analysis report 2015  215 p­ rovince. The FDI in Qujing and Dali exceeded US$100 million, while that in Baoshan exceeded US$100 million for three consecutive years. Qujing, Honghe and Dali reached far beyond the FDI target set for them for the year, and FDI in Chuxiong, Diqing and Qujing increased by more than 55%. Overseas investment: Yunnan maintained its position in traditional markets and made breakthroughs in new markets. The five countries in the Greater Mekong Sub-Region (Laos, Myanmar, Thailand, Cambodia and Vietnam) remained the main destination markets for Yunnan enterprises’ overseas investment. In 2015, Yunnan enterprises set up 67 new facilities in Laos, Myanmar, and Thailand, accounting for 65% of the total number of overseas enterprises established in the year. Real investment in these five countries totaled US$793 million, accounting for 59.4% of the total. Meanwhile, Yunnan enterprises accelerated new market development, and established investment enterprises in the United Kingdom, India, New Zealand, and Canada. So far, Yunnan enterprises have invested in 45 countries and regions in the world. Investment from state-owned enterprises is stable, while a breakthrough was seen in the private sector. In 2015, Yunnan Provincial Energy Investment Group Co., Ltd. and other state-owned enterprises actually invested US$655 million abroad, accounting for 49.1% of the province’s total actual outward investment, nearly half. Private enterprises played an active role. Among the 103 enterprises established abroad by Yunnan enterprises, 89 were private ones, accounting for 86.4% of the total. The actual investment amounted to US$679 million, accounting for 50.9% of the province’s total. Investment involved more industries and fields. In 2015, the overseas investment of Yunnan Province involved nine economic sectors. Traditional sectors such as agriculture, mining, and electricity continued to witness the largest investment. However, the industries of investment diversified with new investment in such fields as advanced manufacturing (e.g., pharmaceuticals), emerging services (e.g., ecological protection and environmental management), e-commerce, and culture. In addition, in 2014, there were seven transnational M&A cases made by Yunnan enterprises, and the agreed investment from the Chinese side reached a record high of US$870 million. 3 )  P R O B L E M S I N I N W A R D A N D O U T W A R D I N V E S T M E N T

Foreign investment utilization: First, it is common that investors take a waitand-see attitude because of the influence of the macroeconomic situation which has led to a generally low expectation and low willingness to invest among investors. Second, large projects still face obstacles in terms of environmental capacity, land and forest-related restrictions, and land planning regulation. These resulted in the slow progress of some projects. More efforts must be made to ensure project implementation. Third, the structure of investment attraction efforts needs to be improved to bring large-scale and high-quality projects that can drive along the industrial development, transformation and upgrading of the whole province. Fourth, different prefectures and cities have shown unbalanced

216  Development overview development, lack of differentiation in investment attraction, poorly targeted investment attraction efforts, low quality of investment projects and insufficient specialization. Fifth, there is a lack of support for FDI growth in the long run. Current foreign investment projects in the province are of small scale and low quality, and offer inadequate driving force for long-term FDI growth. Sixth, there is a lack of direct investment from developed countries. FDI in Yunnan are mainly from Asia, especially the Hong Kong SAR. Overseas investment: First, there is not yet any leading transnational enterprises in Yunnan to drive the going-global campaign of more enterprises in industrial clusters. Enterprises have insufficient experience and ability in the aspects of risk control, international financing, global operation, and overseas investment management. The going-global efforts of Yunnan enterprises mainly focus on mining and hydropower development in neighboring countries and face many unstable and uncertain factors. Poor industrial structure of investment, overconcentration in some businesses, serious homogeneity and weak abilities to respond to changes of environment all posed restrictions on Yunnan enterprises’ overseas investment and cooperation activities. Second, in recent years, the rapid adjustment of the political and economic situations in neighboring countries have led to more external restrictions and control in the field of resources, and marked changes in the investment and cooperation environment in traditional markets. This has posed many risks and challenges to the going-global of relevant enterprises. Third, there is a large funding gap in overseas investment by Yunnan enterprises. Fourth, in Southeast Asian and South Asian countries, the financial systems are not adequate to support the development of some large projects, and the debt financing for them, therefore, needs to be done in the Chinese financial market. Fifth, the debt financing threshold, including loan mortgage and guarantee conditions, is relatively high, and the risk assessment procedure is cumbersome and the lending speed slow. 4 )  T R E N D S A N D P R O S P E C T S F O R 2016

Utilization of foreign capital: In 2016, the utilization of foreign capital is to increase by more than 5% on the basis of the US$2.99 billion of 2015, and the proportions of investment contracts signed and implemented, projects commenced, and funding secured should all be steadily increased. The province will promote the implementation of pre-establishment national treatment and negative list for foreign investment management, and guide foreign investment into the fields of modern agriculture, biomedicine, equipment manufacturing, finance and other strategic emerging industries and modern service industries. Thus, Yunnan will continue to expand foreign investment coverage and improve the structure, so that foreign investment will play a greater role in promoting the further, better-structured and higher-quality opening-up of the province. The province will take a more targeted approach to step up investment attraction efforts in developed countries and regions such as Europe, America, Japan, the Republic of Korea, and Israel, so as to attract more Fortune Global

Regional investment analysis report 2015  217 500 enterprises, international organizations, regional headquarters and R&D centers to Yunnan. The province will fully implement national policies and measures for utilizing foreign capital and further improve the data collection and performance evaluation related to foreign investment. Yunnan will give better play to the roles of its foreign affairs, overseas Chinese and Taiwan affairs departments so as to attract more capital from the Hong Kong SAR, the Taiwan region, and overseas Chinese investors to Yunnan for development. Overseas investment: Overseas investment by Yunnan enterprises is to reach US$1.5 billion in 2016, up 12% from 2015. The industrial distribution is to be further improved, the global resource allocation capability improved, new driving forces for economic growth formed, the process of enterprise transformation and upgrading accelerated, and the ability of overseas investment of enterprises improved. A batch of projects are going to be implemented in the areas of electricity, metallurgy, equipment manufacturing, chemical industry, building materials, light industry and logistics. A number of backbone enterprises for overseas investment will be nurtured and overseas investment will be more than doubled. The province will help the overseas investment enterprises emerge from losses and make overseas investment an important source for driving force for growth. At the same time, Yunnan Province will strive to improve the soft investment environment, encourage multinational companies to set up regional headquarters as well as R&D, procurement and operation centers in Yunnan, and gradually form industrial clusters covering the whole industry chain. It will encourage foreign investment in social public services such as services for seniors and the disabled. The province will make better use of its overseas business representative offices to obtain information on the market conditions, policies, and major projects in relevant countries. Services will be provided for going-global and bringing-in. The province encourages enterprises with comparative advantages to carry out production capacity cooperation abroad, and to undertake overseas construction projects and labor cooperation projects abroad at their own risk. (3)  Investment in and from BRI countries in 2015 1 )  Y U N N A N ’ S I N V E S T M E N T I N B R I C O U N T R I E S

During the 12th Five-Year Plan period, Yunnan stepped up its effort to promote outward investment. A number of qualified state-owned enterprises (SOEs) became the main force of overseas investment, making cross-border investment to improve resource allocation on a larger scale and build overseas presence. These enterprises contributed more than 70% of the province’s total outward foreign direct investment in non-financial sectors. At the same time, investment by SOEs helped a number of small and medium-sized enterprises (SMEs) and private enterprises to go global as well. In 2015, among the 103 new overseas enterprises established by Yunnan investors, 89 were private enterprises, accounting for 86.4% of the total. Neighboring countries like Laos, Myanmar,

218  Development overview Thailand, Cambodia, and Vietnam were destinations of overseas investment from Yunnan. In 2015, the actual investment by Yunnan enterprises in these five countries totaled US$793 million, accounting for 59.4% of the total. This effectively deepened economic relations with these countries and promoted the inclusive development in host countries as projects were largely localized in terms of their operation, contributed a lot to the development of local public welfare undertakings and helped improve local infrastructure such as highways. 2 )  P R O S P E C T S F O R 2016

Yunnan Province will take the initiative to serve and integrate itself into the BRI, which is a major initiative proposed by China, and actively participate in the construction of the Bangladesh–China–India–Myanmar Economic Corridor, the China–Indochina Peninsula International Economic Corridor, the Lancang– Mekong River Cooperation and the Greater Mekong Sub-regional Economic Cooperation. In addition, the province will strengthen exchanges and cooperation with neighboring countries in infrastructure connectivity, cultural exchanges, industrial investment, economy and trade, and finance, strive to build new advantages for further opening-up, actively participate in the establishment of a mechanism for regional interaction and cooperation, and develop itself into a central place for reaching out to South Asia and Southeast Asia. First, Yunnan will continue to improve its investment environment. The province will continue to enhance its administrative, legal and social environment for foreign investment, and accelerate the formation of a market environment, an investment and financing system and a factor allocation system that are conducive to innovation and development. It will treat SOEs, foreignfunded enterprises and private enterprises equally and offer a level ground for competition. It will actively channel foreign investment to areas permitted by law. The province will standardize government supervision and services in regard to investment promotion, project implementation and production management. It will also further reduce approval requirements or delegate more power to lower-level authorities, and improve the review and approval process and efficiency, so as to ensure investment attraction efforts are law-based with standard operations, unified power and responsibility and coordination. The province will take talents as the top driving force for investment attraction, build specialized investment attraction teams and establish related think tanks for this purpose. Second, Yunnan will reform its management system for overseas cooperation projects and improve relevant services. Yunnan will deepen the reform of the management system for overseas investment and make more efforts to streamline administration and delegate power. The province will let enterprises make their own investment decisions and bear the relevant responsibilities by themselves, relax restrictions on overseas investment and simplify relevant management procedures. It will require only filing instead of doing review and giving approval for all overseas investment projects except those covered by relevant

Regional investment analysis report 2015  219 national regulations that stipulate otherwise. The province will guide relevant enterprises to perform sound project feasibility study and demonstration, establish the benefit–risk assessment mechanism, and properly prevent and resolve all kinds of risks emerged in the implementation of projects. Third, the province will move faster to improve infrastructure connectivity with surrounding areas. Yunnan will make active efforts to gain support from the national level to accelerate the construction of major international channels for connectivity, promote the preparatory work for the China–Myanmar Ruili–Kyaukpyu railway and the China–Vietnam Hekou–Haiphong railway so that construction can start as early as possible, and take an active part in the construction of the Mohan–Vientiane railway. The province will also promote the pre-construction work of Zhangfeng–Bhamo (Myanmar) highway and Myitkyina–Banshao Highway, and actively implement the Phase II waterway regulation project on the Mekong River. It will actively seek the support of the World Bank, the Asian Development Bank, the Asian Infrastructure Investment Bank and other international financial organizations, as well as the Silk Road Fund and the China–ASEAN Investment Cooperation Fund, to promote the construction of major cooperation projects. Fourth, Yunnan will strengthen international cooperation in production capacity and equipment manufacturing. Yunnan Province will carry out capacity cooperation in power, equipment manufacturing, metallurgy, chemical industry and other fields in South Asia and Southeast Asia, and establish a comprehensive service support system for the going-global of its enterprises to create a new model for international production capacity and equipment manufacturing cooperation. Based on cross-border economic cooperation zones, border economic cooperation zones and comprehensive bonded areas, the province will attract foreign investment in a scientific and active manner, and take over industrial facilities transferred from elsewhere in automobiles, advanced equipment manufacturing, household appliances, building materials, electronics and information, biomedicine, and other industries. The province will develop exportoriented manufacturing industries and build export-oriented industrial bases for opening up towards South Asia and Southeast Asia. Fifth, the province will accelerate the construction of platforms for openingup and cooperation. Yunnan will speed up the development of Yunnan Dian Zhong New Area, the Ruili and Mengla (Mohan) national key experimental zones for development and opening-up, the Lincang Border Economic Cooperation Zone, and the Honghe Comprehensive Bonded Zone, and push forward the development of the China–Laos Mohan–Boten Economic Cooperation Zone, the China–Vietnam Hekou–Lao Cai Economic Cooperation Zone, and the China–Myanmar Ruili–Muse Cross-Border Economic Cooperation Zone. The province will actively apply for the establishment of Kunming comprehensive bonded zone and the China (Yunnan) pilot border free trade zone, and speed up the development of railway ports and airport economy. Various types of development zones shall be encouraged to innovate in systems and operation modes to bring about a clustering effect. The province will actively participate in

220  Development overview the planning and construction of major projects including overseas ports and industrial parks, support suitable enterprises in the province to go global and participate in the planning and construction of the Kyaukpyu Special Economic Zone in Myanmar, and accelerate the construction of overseas cooperation zones such as Vientiane Saysettha Development Zone and Boten Beautiful Land Specific Economic Zone and Boten Beautiful Land Specific Economic Zone in Laos, and Myitkyina Economic and Trade Cooperation Zone in Myanmar. Sixth, the province will strengthen the development of cooperation mechanisms and platforms. Yunnan will enhance cooperation along the Bangladesh– China–India–Myanmar Economic Corridor and in the Greater Mekong Sub-region, and promote cooperation between the province and Thailand, Laos, Vietnam, Myanmar and India. It will also actively participate in the upgrading of the China–ASEAN Free Trade Zone and the Lancang–Mekong River Cooperation Dialogues. The province will continue to host the China–South Asia Expo, prepare for the China International Agricultural Trade Fair, bring into play the role of opening-up-oriented exhibitions, and build platforms for multilateral diplomacy for mutual benefits, economic and trade cooperation, people-to-­ people exchanges, and overall security. Seventh, the province will continue to improve its opening-up towards other regions of China and towards the outside world. Yunnan Province will enhance opening-up along the border, promote the functions of border port cities (towns), speed up the formation of smooth port channels and logistics and financial service systems in cooperation with neighboring countries, and improve the facilitation of customs clearance and accessibility. Yunnan will build itself into a regional center for goods distribution, investment, and financial services. The province will deepen international and domestic cooperation, promote the development of an open economy in an all-round way, and raise the overall level of multilateral and bilateral cooperation with neighboring countries. The province will further strengthen cooperation and exchanges with the Yangtze River Delta, the Pearl River Delta, the Hong Kong and Macao SARs, and Taiwan, and enhance cooperation with other provincial-level regions in China such as Shanghai. Eighth, the province will strive to promote economic, trade and cultural exchanges and cooperation. Yunnan Province will accelerate the construction of high-level service platforms for education, health, science and technology, culture, and sports, as well as relevant think tanks, and build regional international talent training bases, medical service bases, R&D bases and cultural exchange centers. The province will promote friendly exchanges, economic and trade cooperation and people-to-people exchanges at various levels and in a wide range of fields with neighboring countries, sister cities, nearby regions, as well as international financial organizations and international regional cooperation institutions, so as to foster new advantages in foreign trade development. Yunnan will actively carry out public diplomacy, encourage and support non-governmental foreign exchanges, and enhance support for people’s livelihood, as well as establish a public service platform for international certification and accreditation services and inspection and testing.

Regional investment analysis report 2015  221 6 Tibet (1)  Inward and outward investment of Tibet in 2015 1 )  U T I L I Z A T I O N O F F O R E I G N C A P I T A L

In 2015, Tibet welcomed three new foreign investment projects, with the contractual foreign investment amounting to US$169.6401 million; and the actual utilization of foreign capital coming to US$69.97 million. Foreign direct investment in Tibet in 2015 came mainly from the Hong Kong SAR, and BRI countries were not involved. Tibet mainly used foreign capital in the industries of featured minerals, beer, mineral water, beverages, hotels, tourism, commerce and trade, catering, medicine and healthcare, wool processing and marketing, energy and featured handicrafts. FDI was mainly from the Hong Kong SAR, Nepal, British Virgin Islands, Cayman Islands, Denmark, Canada, Taiwan of China and Australia. 2 )  O V E R S E A S I N V E S T M E N T

In 2015, eight Tibet enterprises reported overseas investment projects and their investment amounted to US$126 million. They invested in the United States, Nepal, Sweden, Mauritius and the Hong Kong SAR. The industries involved included R&D and sales of medical devices, wholesale and retail sales of daily commodities, software R&D, and construction. In 2015, there was one overseas investment project in BRI countries and the investment, US$434,500 in total, went to Nepal. Overseas investment from Tibet showed the following characteristics: First, the majority of investment entities were private enterprises making small investment. Second, growth was fast, and the number of enterprises making overseas investment increased year by year. Third, the fields of investment are expanding. In recent years, after depending mainly on commerce and trade during the early stage, Tibet’s outward investment gradually expanded into the fields of medicine, mining, natural water, food processing, civil aviation, etc. The level of investment and cooperation improved and the scale expanded. (2) Problems 1 )  U T I L I Z A T I O N O F F O R E I G N C A P I T A L

First, although the economy and society of Tibet have developed enormously since the reform and opening-up of China, the autonomous region is still less developed than most other regions in China, and it is far less attractive to foreign capital than other regions. Thus, it is difficult to significantly promote foreign investment in Tibet. Second, with the central government investing more in Tibet, infrastructure in the region, including energy, transportation and communication, has been greatly improved. In particular, the Qinghai–Tibet railway and Lhasa–Shigatse

222  Development overview railway greatly improved the investment environment of the region. However, compared with other regions, especially the eastern and coastal areas, infrastructure in Tibet is still backward, and there is still a long way to go with regard to the conditions and environment to attract foreign investment. Third, the history of foreign capital utilization in Tibet is short, and the relevant policy system and corresponding implementation measures to encourage foreign investment still need to be improved. Publicity and promotion have also been insufficient, and foreign investors generally lack knowledge of the actual situation of Tibet. 2 )  O V E R S E A S I N V E S T M E N T

First, the industrial investment from Tibet is generally small in scale and made by small-sized enterprises with limited innovation capacity. Investors have weak ability to guard against risks and thus find it hard to survive in the international market. The international competitiveness of local featured products is thus weakened. Second, the management innovation ability of Tibetan enterprises needs to be improved. Outstanding restrictions include capital, technology, talents and corporate management system. The lack of senior management talents for overseas investment makes it hard for Tibetan enterprises to adapt to the fierce competition in the international market. Third, there is insufficient market information, and a lack of understanding of investment projects. In the process of overseas investment, enterprises’ knowledge of targeted countries is still insufficient, particularly in terms of investment environment, market supply and demand conditions, the degree of industrial competition and government policies, resulting in poor performance or non-­ performance as well as other predicaments in the course of operation. (3)  Prospects for 2016 First, Tibet will strive to introduce large-scale projects and improve the scale, quality and level of foreign investment, and make further efforts to improve the investment environment and the management and service level for existing ­foreign-funded enterprises. It will encourage foreign investment to shift to competitive featured industries in Tibet, green and clean industries and industries with wide linkages, so as to improve the quality of foreign capital utilization significantly. Second, Tibet will make use of various investment attraction platforms to promote investment attraction. Third, it will cultivate an important carrier for inward and outward investment by promoting industrial park development. Fourth, it will actively participate in the implementation of the BRI, strengthen cooperation with and opening further up toward India and Nepal, and further enhance the scale and quality of inward and outward investment.

Regional investment analysis report 2015  223 Fifth, it will actively implement the new version of the Administrative Measures for Overseas Investment, simplify the review and approval procedures, give full play to the guiding role of policy funds, and encourage local enterprises to make overseas investment. 7 Shaanxi (1)  Foreign investment In 2015, 112 new foreign-invested enterprises were approved in Shaanxi, with a contractual foreign investment of US$5.782 billion and an actual utilization of US$4.621 billion, a 10.67% year-on-year increase. Up to 115 Fortune Global 500 companies established facilities in the province. The average investment of foreign-invested enterprises increased. The average total investment of each new foreign-invested enterprise was up to US$41.25 million, representing a 39.5% year-on-year increase. Major investment sources were the Republic of Korea (with a contractual foreign investment of US$3.415 billion), the Hong Kong SAR (with a contractual foreign investment of US$1.327 billion), Singapore (with a contractual foreign investment of US$212 million), and Germany (with a contractual foreign capital of US$294 million). The province made full use of the driving force of projects of Samsung, provided outstanding services for key foreign investment projects such as Samsung’s capital increment and capacity expansion project and the Samsung SDI power battery project (Phase II), attracting 92 supporting enterprises to settle in Xi’an. The fifth Shaanxi–Guangdong–Hong Kong–Macao Economic Cooperation Week achieved remarkable results, with a total of 16 project contracts signed involving a total investment of US$1.997 billion. The luncheon held at the Boao Forum for Asia 2016 effectively introduced Shaanxi to the outside world. (2)  Overseas investment In 2015, Shaanxi enterprises set up a total of 69 overseas enterprises. The contractual investment from the Chinese side amounted to US$709 million, up 1.6 times from the previous year. The actual investment was US$666 million, an increase of 47%. Investment mainly went to the United States and the Hong Kong SAR, covering equity M&A, equipment manufacturing, mineral resources, wholesale and retail sales and other fields. (3)  Investment in and from BRI countries 1 )  R E L E V A N T P O L I C I E S

In 2015, policies were put forward to promote the participation of enterprises in the implementation of the BRI. These mainly included the Opinions of the General Office of People’s Government of Shaanxi Province on Further Promoting

224  Development overview ­ verseas Investment, the Circular of the People’s Government of Shaanxi O ­Province on Issuing the Work Plan to Disseminate Reform and Pilot Experiences of China (Shanghai) Pilot Free Trade Zone, the Implementation Opinions of the People’s Government of Shaanxi Province on Improving Port Work and Promoting the Development of Foreign Trade, the Implementation Opinions of the General Office of the People’s Government of Shaanxi Province on Speeding up the Cultivation of New Advantages in Foreign Trade Competition, the Circular of the General Office of People’s Government of Shaanxi Province on Issuing the 2015 Action Plan for the Implementation of the Belt and Road Initiative, the Implementation Opinions of the General Office of People’s Government of Shaanxi Province on Promoting Innovation-Driven Development of Processing Trade, the Circular of the General Office of the People’s Government of Shaanxi Province on Issuing the 2015 Action Plan for the Implementation of the Belt and Road Initiative, the Implementation Opinions of the People’s Government of Shaanxi Province on Promoting International Production Capacity and Equipment Manufacturing Cooperation, and the Five Measures to Streamline Procedures of Visa and Residence Permit Application for Foreigners. 2 )  C O N N E C T I V I T Y W A S P R O M O T E D I N A N A L L - R O U N D W A Y

As a transportation hub connecting the vast hinterland of China with the ­Eurasian Continental Bridge and the Maritime Silk Road, Shaanxi Province took road-building as a priority in its implementation of the BRI, worked hard to build land, air, and digital silk roads. The land Silk Road is featured by railways and highways and progress was fast. The total length in use amounted to 5,000 kilometers of expressways, and 4,900 kilometers of railroads. The air Silk Road, focusing on the development of intercontinental air routes, achieved a major breakthrough, with direct flights to Moscow, Paris, Osaka, Male, Bali, Almaty and San Francisco launched. There was a total of over 40 international and regional routes, plus intentions reached to open five new routes to ­Melbourne, New Delhi, Jakarta, Kathmandu and Irkutsk. The province made active efforts to build the “Chang’an” brand for international freight transportation and source goods for departure trains. By the end of June 2016, The Chang’an freight train to Central Asia had run 206 trips with 10,158 trailers and 305,000 tons of cargo. Shaanxi actively promoted the connection of sea and land transportation. It launched Xi’an (Xinzhu)–Qingdao (Huangdao Port) international freight train route, running 23 trains and 910 trailers. The function of Xi’an as an international inland port constantly improved. Xi’an was officially approved as an inland port and given a national code and an international code. It became the first inland departure/arrival port in China. Xi’an Multimodal Transportation Supervision Center was also put into operation. The digital Silk Road, focusing on cross-border e-commerce, will soon be completed. The state-level backbone Internet direct connection point is launched in Xi’an and the pilot program for cross-border e-commerce service was put into operation. Shaanxi also launched the first land–air connection transportation line for cross-border e-commerce

Regional investment analysis report 2015  225 from Amsterdam to Xi’an, which reduced transportation time by two-thirds and cut the logistics cost by a quarter. Regional customs clearance integration has achieved remarkable results. The average customs clearance time for import and export cargo reduced by 50%, and logistics cost was down by 20–30%. In addition, the province set up a direct customs clearance cooperation mechanism with Horgos and Alashankou in Xinjiang in the west, and improved customs clearance cooperation with Shanghai, Tianjin, Qingdao and Lianyungang ports in the east. With these in place, Shaanxi became a connection point of East and West China as well as between inland China and the outside world. 3 )  I N T E R N A T I O N A L E C O N O M I C A N D T R A D E C O O P E R A T I O N D E E P E N E D

Relying on various international cooperation platforms, Shaanxi increased its efforts to “bring in and go global,” and strengthened exchanges with BRI countries to integrate itself into the global economy faster and better. Efforts were stepped up to build zones for cooperation with Kazakhstan, Kyrgyzstan, and Italy. A batch of supporting enterprises serving Samsung, Microsoft, Johnson & Johnson and other Fortune Global 500 enterprises in the world, settled in the province, and all major projects were in smooth progress. The internationalization of large state-owned enterprises (SOEs) such as Shaanxi Coal and Chemical Industry Group, Shaanxi Non-ferrous Metals Holding Group, Shaanxi Automobile Group, and Shaanxi Fast Auto Drive Co., Ltd., moved forward steadily, and their cooperation with partners in BRI countries deepened in many ways, opening up new space for the overseas development of Shaanxi. The oil refining and chemical plant of Shaanxi Coal and Chemical Industry Group in Kyrgyzstan became the largest investment project in the country, laying a foundation and accumulating experience for the building of three Shaanxi industrial parks in Central Asia and Africa. Shaanxi Province actively explored the markets of Central Asia, organized 30 competitive enterprises to the 13th China Commodities Fair and held the Second Shaanxi Specialty Fair in Kazakhstan. In March 2016, the first return trip of “Chang’an” marked the start of reciprocal trade activities between Shaanxi and Central Asia, and helped Kazakhstan export its commodities to the inland areas of China for the first time ever. In 2015, Shaanxi’s overseas investment in Central Asian countries increased significantly, with the contractual investment amounting to US$236 million. The contractual investment to Kazakhstan, Kyrgyzstan and Tajikistan were US$121 million, US$107 million and US$92 million, respectively, mainly covering petrochemical, cement and building materials, agriculture and textile industries. By the end of 2015, Shaanxi’s investment in major projects in the five Central Asian countries exceeded US$649 million, involving such industries as petrochemical, energy, mineral resources development and building materials. At the same time, Shaanxi Province intensified its marketing efforts in the Republic of Korea, organized 22 key food enterprises to participate in Seoul International Food Industry Exhibition 2015 to promote Shaanxi special food products to the country. The province also organized

226  Development overview enterprises to participate in Xiamen International Fair for Investment and Trade and the China–ASEAN Expo, launched a number of matchmaking events and project promotion activities, and increased economic and trade cooperation with Taiwan of China and ASEAN countries. Up to 194 Shaanxi enterprises had made overseas investment totaling US$2.43 billion in 48 countries and regions, including the United States, Thailand and Kyrgyzstan. The investment went to 15 industries such as equipment manufacturing and mineral resources exploration. 4 )  R I C H A C H I E V E M E N T S I N I N T E R N A T I O N A L C O O P E R A T I O N I N SCIENCE AND EDUCATION

With abundant science and education resources, Shaanxi carried out a series of cooperation in education, technology, industry and other fields with BRI countries. Construction sped up for China Silk Road Innovation Park and the Western China Science & Technology Innovation Harbor Wisdom Uni-Town, which are designed as scientific and technological innovation special zones for international cooperation. The province made technological breakthroughs in cooperation with Central Asian countries in the fields of energy exploitation, fine chemical industry, biomedicine, electronics and information, with the purpose to promote innovation-driven development in the relevant industries. Relying on the Yangling Dryland Agriculture International Cooperation Center, Shaanxi provided technical support for Central Asian countries in the aspects of dry land operation, protected agriculture, green manure planting and the like. The Yangling demonstration zone offered great help in the building of seven cooperation parks in Kazakhstan, Kyrgyzstan, Australia, the Netherlands and other countries. At present, 124 universities from 30 countries and regions on five continents joined the University Alliance of the New Silk Road initiated by Xi’an Jiaotong University, and embassies of the United Kingdom, Egypt and Iran in China also expressed intention to join or cooperate. Medical institutions in the province carried out joint medical and training programs with Russia, Indonesia, the Republic of Korea and other countries and signed a scientific and technological cooperation agreement with the Russian Academy of Medical Sciences. The transnational cooperation in science, technology, education and related industries became a new highlight of Shaanxi’s opening-up to the outside world. 5 )  P E O P L E - T O - P E O P L E C O M M U N I C A T I O N I N C R E A S E D

In order to give full play to the advantages of its long-standing friendship with BRI countries, Shaanxi actively inherited history and culture, carried forward the Silk Road spirit, and moved towards openness and inclusion to an unprecedented extent. It held the 2015 Euro–Asia Economic Forum, the 2016 Silk Road International Exposition and the 20th Investment and Trade Forum for Cooperation between East and West China, Statistics Conference of BRI countries, the Forum for Heads of Customs Administrations along the Silk Road, and the 14th Economic

Regional investment analysis report 2015  227 and Trade Ministers’ Meeting of SCO Member States, reaching a series of cooperation intentions and achievements. The Silk Road International Arts Festival and Film Festival, the Thousand Miles on the Silk Road, 2015 Silk Road International Talent Competition for Youth and other events were also held in succession, with increasing scale and influence. Events like Shanghai Cooperation Organization National Commodity Exhibition and the 22nd China Yangling Agri High-tech Fair all performed well and received excellent feedback. Xi’an also hosted the Silk Road International Tourism Expo 2015, attracting government agencies and tourism enterprises from 33 countries and regions and 24 provinces and municipalities and autonomous regions of China. The province also designed more than 20 Silk Road international tour routes linking Xi’an to Rome, Dubai, Istanbul and other cities and put into use the special Silk Road tour trains from Xi’an to Urumqi, which was warmly welcomed by the general public. Exchange of visits and communications between outstanding young civil servants and college students were organized in an orderly manner. A total of 14 new pairs of sister cities and quasi-friendship cities were formed, and the province’s friendship with provinces and states of Central Asian countries and other countries was further boosted. 6 )  C O M P R E H E N S I V E S U P P O R T C A P A C I T Y E F F E C T I V E L Y STRENGTHENED

In order to advance BRI-related work in an orderly manner, Shaanxi improved its comprehensive support capacity in various aspects, such as policy-making, environment improvement and public opinion guidance. The 2015 Action Plan for the Implementation of the Belt and Road Initiative in Shaanxi Province was issued and implemented, the 72-hour visa-free transit policy was put into effect, and tax refund for foreign tourists was formally approved, making the province the second in West China and the first in Northwest China to offer tax refunds. In addition, the refund rate is 1 percentage point higher than in the other eight provinces and municipalities where a tax refund is applicable, making Shaanxi more attractive to foreign travelers. The official launch of the Shaanxi Belt and Road Language Service and Big Data Platform laid a good foundation for promoting in-depth cooperation between Shaanxi Province and BRI countries. Many financial institutions provided tailor-made innovative services and financing support for Shaanxi enterprises to go global, and the financial service mechanism was gradually improved. At the end of May 2016, Shaanxi Provincial Tax Service, State Taxation Administration, signed tax service agreements with eight enterprises, including China National Tobacco Corporation, Shaanxi Heavy Duty Automobile Co., Ltd., and China XD Group Co., Ltd. These represented the first open commitment made by the taxation authorities to goingglobal enterprises in the form of a service agreement. The province established a platform for promoting cooperation in environmental protection and technology with the Ministry of Environment of the Republic of Korea, and carried out cooperation in environmental protection, pollution prevention and control with

228  Development overview the government of Kyoto, Japan. It also held, in succession, large-scale interviews, such as “Chasing Dreams along the Silk Road in Solicitous Shaanxi” Chinese and Foreign Media Interviews, “Shaanxi Trip for the Management of Business News Papers and Media across the World” and the “Shaanxi on the Belt and Road.” The image of Shaanxi as the starting point of the Silk Road was established and polished. The special issue of “Shaanxi: A New Starting Point of the Silk Road” was jointly produced with Ta Kung Pao of the Hong Kong SAR, and a special column “Shaanxi China: The place where the Silk Road starts,” was launched on the website of a Kazakhstan News Agency, which further spread the story of Shaanxi. 8 Gansu In 2015, Gansu Province conscientiously implemented the guiding principles of the 18th National Congress of the CPC, the second, third, fourth and fifth plenary sessions of the 18th CPC Central Committee, and President Xi Jinping’s series speeches. It also actively adapted to the economic new normal in accordance with the general arrangements of the four-pronged comprehensive strategy. The province actively seized the opportunities brought about by the BRI, further strengthened the utilization of foreign capital, vigorously promoted international capacity cooperation, and performed all related work well. In 2015, the province actually utilized US$470 million of foreign capital, including US$350 million in foreign loans and US$120 million in foreign direct investment. Gansu enterprises invested US$230 million overseas. Foreign capital utilization and overseas investment of Gansu both achieved steady development. (1)  Utilization of foreign capital 1 )  F U R T H E R S T R E N G T H E N I N G F O R E I G N D E B T M A N A G E M E N T

First, Gansu stepped up efforts to make good plans for foreign loan projects. Based on the major decisions and deployment of the CPC Gansu Provincial Committee and the People’s Government of Gansu Province, in line with the latest policy orientation regarding foreign loans, and focusing on the areas of featured agriculture, poverty alleviation, new urbanization and cultural progress, Gansu Province vigorously utilized foreign loans to promote and deepen reform, solved systemic and overarching problems, and actively planned major projects with strategic, fundamental and demonstrative significance. It planned for the comprehensive utilization of water resources in Tianshui, an important city in eastern Gansu on the Silk Road Economic Belt, and Silk Road-themed cultural heritage and innovation projects. It also applied for a loan of US$600 million (or RMB3.6 billion) from international financial organizations. In accordance with the Circular on Submitting Candidate Projects for Using Foreign Government Loans in 2015 (FGBWZ [2015] No. 2592) of the National Development and Reform Commission and the Ministry of Finance, Gansu Provincial Development and Reform Commission and Gansu Provincial Department of Finance

Regional investment analysis report 2015  229 solicited projects from all cities and prefectures of the province, and departments directly under the People’s Government of Gansu Province. These projects were then submitted to the central government as approved by the People’s Government of Gansu Province. Efforts were then made to get the submitted projects approved at the central level. Second, the province accelerated the implementation of the planned foreign loan projects. The Report on Using Foreign Loans to Boost the Economic and Social Development of Gansu Province (GFGQB [2015] No. 78) was submitted to the provincial government, putting forward relevant suggestions. The report was reviewed at the 98th executive meeting of the People’s Government of Gansu Province and responsibilities were clearly assigned to the relevant departments directly under the provincial government. There were 37 major foreign loan projects implemented in Gansu involving RMB4.4 billion of investment, and they may help attract RMB12 billion more foreign investment in related fields. 2 )  V I G O R O U S L Y A T T R A C T I N G F O R E I G N D I R E C T I N V E S T M E N T

Gansu continued to strengthen its efforts to streamline administration and delegate power, constantly improved the service system for foreign investment, optimized the investment environment, took development zones and industrial concentration areas including the Lanzhou New Area as the carriers of investment projects, and took featured and advantageous industries with strategic significance as the focus to open further up westward and enhance cooperation with partners in the east. In view of the chronic shortage of foreign direct investment, the province focused on its advantageous industries such as petrochemical, non-ferrous metals, metallurgy and new energy to seek breakthroughs, and sped up the opening-up of its service sector such as education, culture and finance, and actively undertook industries transferred from the east. The province did a good job in the approval and filing of foreign investment projects, made active efforts to provide relevant services, and constantly improved the environment for foreign investment. It issued tax exemption confirmation to foreign investment projects fast according to relevant policies, actively implemented the preferential policies for foreign investment, and created favorable conditions for more foreign investment to come to the province. (2)  Overseas investment To implement the Guiding Opinions of the State Council on Promoting International Cooperation in Production Capacity and Equipment Manufacturing (GF [2010] No. 30) and the NDRC’s Circular on the Establishment of the Departmental and Provincial Coordination Mechanism to Promote the International Capacity and Equipment Manufacturing Cooperation (FGWZ [2015] No. 1149), seize opportunities and strive to sign collaboration agreements, Gansu carried out a series of work. First, together with the Department of Industry and Information Technology of Gansu Province and other relevant departments and enterprises,

230  Development overview it completed the Implementation Plan for Promoting International Production Capacity and Equipment Manufacturing Cooperation in Gansu Province after indepth investigation and discussion, and repeated revision and improvement. Second, the province planned a total of 20 key projects after careful research and demonstration, with a total investment of US$19.5 billion in the petrochemical industry and other fields in Kazakhstan and other countries. Gansu Jiu Steel Group’s bauxite and alumina project in Indonesia and seven other projects were included in the Country-Specific Plan for International Production Capacity and Equipment Manufacturing Cooperation formulated by the NDRC and the Ministry of Foreign Affairs (FGWZ [2015] No. 2588). These projects involved a total investment of US$12.9 billion, ranking high in terms of the number of projects and the investment amount. Third, the collaboration mechanism agreement between the provincial government and the relevant commissions was drafted and adopted on the 88th executive meeting of the People’s Government of Gansu Province. Fourth, the province considered the signing of the collaboration mechanism agreement a top priority and relevant work was implemented by dedicated personnel sent by the province under supervision at the provincial level to ensure the early signing of the agreement. As another important measure at the national level to support the development of Gansu Province, it has not only important economic and social significance for the development of the province in the new era, but also great political significance. This was a milestone in the implementation of the BRI and the development of an open economy in Gansu. 9 Qinghai (1)  Inward and outward investment in 2015 Under the active support and assistance of the CPC Qinghai Provincial Committee and the People’s Government of Qinghai Province, as well as the NDRC, Qinghai utilized foreign capital to firmly grasp the major historical opportunities of the implementation of the BRI, based itself on its own advantages, adhered to the combination of opening-up and deepened reform. It pursued opening-up both toward other regions of China and other countries of the world to make full use of domestic and foreign resources and markets, pushing the province’s foreign investment utilization and foreign economic cooperation up to a new level. 1 )  U T I L I Z A T I O N O F F O R E I G N C A P I T A L

The province focused on the key directions of foreign government loans and carefully selected and planned foreign investment projects. In accordance with the spirit of the Circular of the National Development and Reform Commission and the Ministry of Finance on Issues Related to the Reform of the Management of Loans from International Financial Organizations and Foreign Governments

Regional investment analysis report 2015  231 (FGWZ [2015] No. 440), the province followed strictly the working procedures for foreign loan utilization, reviewed the feasibility study report of the medical equipment purchase project of Qinghai Provincial People’s Hospital with loans from the government of Israel, the feasibility study report of the Liupanshan poverty alleviation project of the International Fund for Agricultural Development (IFAD), and the feasibility study report of Xining greening and ecological protection project with loans from Germany. It also submitted the fund applications of these projects to higher-level authorities and actively communicated and coordinated with relevant parties to speed up the progress of these projects. Meanwhile, according to the Circular of the National Development and Reform Commission and the Ministry of Finance on the Submission of Candidate Projects for Foreign Government Loans in 2015 (FGBWZ [2015] No. 2592), the province submitted the advanced medical equipment introduction project of the Fifth People’s Hospital of Qinghai Province with sovereign guarantee loans from the Export-Import Bank of the United States, the ecological and low-carbon greening project in Nanbei Mountains of Haidong with loans from the French Development Agency (AFD), and the farmland and water ­conservancy facilities project with loans from the Israeli government. These projects involved a total of US$127 million of foreign loans. In January 2015, Qinghai issued the Measures for Approval and Filing of Foreign Investment Projects in Qinghai Province. Within the year, the province approved eight new foreign investment projects and handled six capital increment projects. The total foreign investment was US$499.862 million, the total registered capital was US$240.6756 million, and the contractual foreign capital utilization stood at US$159.576 million. FDI mainly came from the Hong Kong SAR, New Zealand, India, the British Virgin Islands, and Malaysia, and the projects were in trade, catering, futures brokerage, bottled water production and sales, and photovoltaic power generation. 2 )  O V E R S E A S I N V E S T M E N T

In January 2015, Qinghai issued the Measures for Approval and Filing of Foreign Investment Projects in Qinghai Province. Within the year, the province approved 16 overseas investment projects, with an investment of US$1,042.8147 million and an actual investment of US$73.44 million in the United States, the United Arab Emirates, Afghanistan, Kyrgyzstan, Nepal, Malaysia, and Guinea. Relevant projects involved building materials manufacturing, hotel management, trade and other areas. Compared with 2014, the actual overseas investment increased by 260.18%. In 2015, Qinghai completed a turnover of US$125.1 million in overseas contracted projects, with new contracts worth US$23.5 million. The projects, which covered the areas of expressway, housing construction, public utilities and power transmission and transformation, were mainly distributed in countries like Angola, Chad and Gabon. Compared with 2014, the turnover decreased slightly.

232  Development overview (2) Problems First, the scale of foreign investment was small, and the regional distribution was unbalanced. The foreign capital absorbed by Qinghai Province accounted for a small proportion of the national total of China, and there was a large gap between Qinghai and the coastal provinces and municipalities in foreign investment attraction. Foreign capital had a weak driving force on the economy of the province. Foreign investment projects mainly concentrated in Xining, Haidong, and Haixi cities, with the southern part of the province largely left out. Second, the quality of foreign investment is not high. From the perspective of investment sources, most of the overseas investors in Qinghai were small and medium-sized enterprises; no world-renowned multinational companies or mega-conglomerations were present here. Foreign investment projects were generally low-tech and the province did not have its brands and renowned products. Foreign investment failed to cluster along industry chains. Third, the number of overseas investment enterprises was small, and so were their scale and business scope. Most of the enterprises engaged in overseas investment were private entities, whose operation and management as well as organizational structure were not so good, and there were not enough people in these enterprises who are familiar with international operation and management. The imperfect operation of overseas enterprises led to poor comprehensive competitiveness and low ability to guard against risks in overseas activities. Most enterprises had no ability to withstand uncertainties or work-related accidents. In addition, the incentives for overseas investment were insufficient, leading to a lack of effective promotion, supervision and services. Fourth, the ability to attract and carry foreign capital is not strong. Qinghai Economic and Technological Development Zone is the main carrier of foreign investment projects in the province and foreign investment has always been a major task of the development zone. However, in the actual development process, the ability and level of foreign investment attraction was low. Fifth, the province had low ability to provide supporting funds for projects with foreign loans, and prior work of such projects needs to be further strengthened. Talents specialized in work related to foreign loan projects were inadequate. Candidate project reserves were insufficient and much work remained to be done. (3)  Prospects for 2016 Qinghai has great opportunities for both foreign capital utilization and overseas investment. From the perspective of political environment and policy, BRI countries actively responded to the grant proposal made by China. In such a context, Qinghai will continue to make good use of its superior resources and take into consideration the market demand in the surrounding areas. It will mainly seek to build closer ties with Central Asia, West Asia, and Southeast Asia through enhanced policy coordination, facilities connectivity, unimpeded trade, financial

Regional investment analysis report 2015  233 integration and people-to-people bonds. The province will continue to promote the healthy development of inward and outward investment, accelerate the cultivation of new advantages in international cooperation and competition, promote eastward and westward opening-up, and form a multi-level and allencompassing new pattern of opening-up so as to gain more development opportunities 10 Xinjiang (1)  Recent policies of Xinjiang to promote inward and outward investment 1 )  U T I L I Z A T I O N O F F O R E I G N C A P I T A L

First, the People’s Government of the autonomous region formulated the Circular of the People’s Government of Xinjiang Uygur Autonomous Region on Issuing the Catalogue of Investment Projects Approved by the Government (2015) (XZF [2015] No. 45), delegating the power for approving encouraged projects with a total investment (including capital increment) of less than US$1 billion and with a Chinese controlling shareholder to prefectural investment authorities and the management authorities of national development zones. Second, Xinjiang Uygur Autonomous Region Development and Reform Commission issued the Implementation Opinions on Innovation in Investment and Financing Mechanisms in Key Areas to Encourage Private Investment, announcing in two batches 125 pilot social capital projects, involving a total investment of over RMB257 billion in 2015. This showcases the preliminary achievements made in attracting social capital. 2 )  O V E R S E A S I N V E S T M E N T

First, in order to implement Several Opinions of the State Council on Further Promoting Overseas Investment (GF [2014] No. 9), and the Guiding Opinions of the State Council on Promoting International Cooperation in Production Capacity and Equipment Manufacturing (GF [2015] No. 30), in light of the actual situation of Xinjiang, the Development and Reform Commission of Xinjiang Uygur Autonomous Region drafted the Implementation Opinions on Further Promoting Overseas Investment and Cooperation in International Capacity and Equipment Manufacturing (XZF [2016] No. 47) and it was issued by the People’s Government of Xinjiang Uygur Autonomous Region in April 2016. Second, Xinjiang strengthened the analysis and research for overseas investment, and compiled information of key countries for international capacity and equipment manufacturing cooperation, focusing on neighboring countries, based on the national country-specific plan for international production capacity and equipment manufacturing cooperation. This provided enterprises with information concerning the basics of destination countries and offered guidance in a timely manner. It also improved the follow-up services for overseas investment projects.

234  Development overview (2)  Inward and outward investment of Xinjiang in 2015 1 )  G R O W T H O F B O T H I N W A R D A N D O U T W A R D I N V E S T M E N T

i)  Utilization of foreign capital. In 2015, there were 50 newly approved foreign investment projects in Xinjiang, a 2% year-on-year increase; the contractual foreign investment was US$856.51 million, a 62.82% increase from the previous year; the actual utilization of foreign capital was US$452.50 million, an 8.51% year-on-year increase. The main characteristics are as follows: First, nine large projects involving a total foreign investment of US$500 million stimulated the growth of contractual foreign investment. Second, the quality of foreign investment utilization improved, and the amount of contractual foreign investment in the financial service industry exceeded US$160 million as the autonomous region gave full play to the advantages of the financial innovations of the Horgos International Border Cooperation Center, and approved three ­foreign-funded financial leasing companies there. Third, the actual utilization of foreign capital grew slightly, and investors have generally extended their investment period due to the reform concerning registered capital. Applying for loans from international financial organizations and foreign governments is another effective way to obtain foreign capital. In order to bring in capital, talents, and technology, Xinjiang increased its efforts to obtain foreign loans. In 2015, four projects in Xinjiang were included in the national candidate project database for 2015–2017 with loans from the Asian Development Bank, totaling US$550 million. ii) Overseas investment. In 2015, 11 overseas investment projects were filed, with investment from the Chinese side amounting to US$1.102 billion, a 37% year-onyear increase. By the end of 2015, there were a total of 376 overseas investment enterprises and 88 overseas institutions created by Xinjiang enterprises, with the contractual outward investment totaling US$8.17 billion. Projects were distributed in more than 30 countries, of which 53% were in the five Central Asian countries of Kazakhstan. Kyrgyzstan, Tajikistan, Uzbekistan and Turkmenistan. 2 )  S T R U C T U R E O F I N W A R D A N D O U T W A R D I N V E S T M E N T

i) Foreign investment. In 2015, the distribution of foreign investment across industries in Xinjiang was as follows: agriculture, forestry, animal husbandry and fishery received 2.9% of the total, mining 5.7%, manufacturing 59.7%, power, gas and water production and supply 7.7%, transportation, warehousing and postal services 11.8%, wholesale and retail sales 7.4%, real estate 0.6%, leasing and business services 0.5%, scientific research, technical services and geological surveying 3.6%, life services and other services 0.1%. Foreign investment in Xinjiang came from 23 countries and regions of the world, including the Hong Kong SAR, Taiwan of China, India, Japan, Malaysia, Singapore, the Republic of Korea, Turkey, Seychelles, the United Kingdom, Germany, Luxembourg, the Netherlands, Georgia, Azerbaijan,

Regional investment analysis report 2015  235 Kazakhstan, Russia, the Cayman Islands, the British Virgin Islands, Canada, the United States, Bermuda, and Australia. ii)  Overseas investment. In 2015, the distribution of Xinjiang’s overseas investment in various industries was: 35% in agriculture, 29% in energy, 12% in mining, 10% in infrastructure, 8% in the light industry, and 6% in other industries. Major destination countries and regions were Kazakhstan, Kyrgyzstan, Uzbekistan, the Hong Kong SAR, the United States, Italy, etc. 3) Problems i) Environment for foreign investment in Xinjiang needs to be improved. In terms of infrastructure and facilities, the existing transportation, communications, industrial parks, ports and urban infrastructure in Xinjiang are not good enough to meet the requirements of its own development and opening-up, so only a limited number of foreign-funded enterprises chose to settle in Xinjiang. For services, due to hampered stability, foreign investors showed a lack of confidence in business operation in Xinjiang. ii)  Economic and political uncertainties in neighboring countries directly affect Xinjiang enterprises’ intention to invest abroad. First, there are policy risks. In some Central Asian countries, there are increasing disputes over resource utilization, changing policies, poor transparency, and strong nationalist sentiment, which increases the instability and uncertainty for foreign investors. Second, there are security risks. Political turmoil in Central Asian countries, for example, the political turmoil in Kyrgyzstan, affected the interests of Xinjiang enterprises in the country. Third, there are economic risks. Neighboring countries such as Kazakhstan are suffering from an economic slowdown and price hikes, resulting in a declined return on overseas investment for Xinjiang enterprises. iii)  Lack of domestic support for overseas investment. First, there are financing difficulties. When it comes to providing financing for large overseas investment projects, Chinese banks have insufficient policies in place and make inadequate efforts. In addition to high rates, the financing and insurance institutions also had no special policies to support advanced equipment manufacturing industry. Second, customs clearance is difficult. The infrastructure and port construction in neighboring countries bordering on Xinjiang were insufficient and customs clearance was largely inefficient. It is difficult and expensive for people to apply for visas. Third, there are many policy restrictions. China has a lot of restrictions on the import of crude oil and mineral resources, which to some extent affected the enthusiasm of Xinjiang enterprises to go global and bring in. Fourth, there is inadequate coordination and guidance. There are not enough national policies and financial support in place to facilitate overseas investment, and a lack of effective coordination, guidance and incentive mechanisms. There is also a lack of special policy support for Xinjiang enterprises, especially private ones, to go global.

236  Development overview iv)  Overall strength of Xinjiang enterprises is weak. Different from the situation in other provinces of China, more than 95% of the Xinjiang enterprises that made overseas investment are private ones. Limited by relevant policies, capital and technology, these enterprises’ overseas operations are generally of small scale and weak strength. They lack talents for and experience in transnational operation and cultural integration, have comparatively low credibility and generally less-known projects, and face growing restrictions and risks related to foreign government intervention. Compared with some well-known enterprises from other parts of China, Xinjiang’s private enterprises lag behind in many aspects of overseas investment. 4 )  D E V E L O P M E N T T R E N D S A N D P R O S P E C T S F O R 2016

Since the Second Xinjiang Work Seminar of the State Council and the Fifth National Support for Xinjiang Conference, the central government and 19 provinces and municipalities that were paired up to support Xinjiang in various areas have increased their support for the region. The overall goal was defined as achieving social stability and lasting stability for Xinjiang. Positioned as a core part on the Silk Road Economic Belt, Xinjiang comprehensively enhanced cooperation and communication with various BRI countries and regions in all aspects including energy, economy and trade, finance, culture, science and technology, ecology and tourism at multiple levels. Xinjiang will make better use of its advantageous position to accelerate its opening-up to the outside world and promote development, and advance foreign investment utilization and overseas investment. In 2016, given the downward pressure on the economy, it is reasonable that the actual utilization of foreign capital is to remain stable or grow by about 5% over 2015, foreign loans will stay at around US$200 million, and overseas investment is expected to be around US$500 million. (3)  Investment in and from BRI countries in 2015 1 )  I N V E S T M E N T O F B R I C O U N T R I E S I N X I N J I A N G

In 2015, the total actual investment of BRI countries and regions in Xinjiang was about US$220 million. The investment was mainly distributed in manufacturing (59.7%), transportation, warehousing and postal services (11.8%), and wholesale and retail sales (7.4%). The contribution of different source countries and regions were as follows: 82% from Asian countries and regions (the Hong Kong SAR, Taiwan of China, India, Malaysia, Singapore, the Republic of Korea and Turkey), 17.3% from Europe (the United Kingdom, Germany, Luxembourg, the Netherlands, Georgia, Azerbaijan, Kazakhstan, and Russia); and 0.7% from Africa (Seychelles). Xinjiang Zhenghe Communication Facilities Service Co., Ltd., Xinjiang Jiadi Agricultural Science and Technology Co., Ltd., and Shanghai Volkswagen Automotive Co., Ltd. made investment in BRI countries.

Regional investment analysis report 2015  237 2 )  X I N J I A N G ’ S I N V E S T M E N T I N B R I C O U N T R I E S

In 2015, Xinjiang enterprises invested in seven projects in BRI countries. The total investment from the Chinese side was US$669 million, mainly directed to the energy sector (41%), agriculture and animal husbandry (29%), mining (18%) and the light industry (12%). The shares of each destination country and region in the total were as follows: 67% in Kazakhstan, 14% in Uzbekistan and 19% in Tajikistan. The investment enterprises were Central Asia Oil and Natural Gas Co., Ltd., Xinjiang Jiemeitong Animal Husbandry Industry Co., Ltd., Zijin Mining, Alashankou Jinyuanheng Industry and Trade Co., Ltd., Xinjiang Amon Energy Co., Ltd., Xinjiang Zhundong Petro Tech Co., Ltd., Xinjiang Guanghui Petroleum Co., Ltd., Xinjiang Yuankun Jingu Agricultural Science and Technology Co., Ltd. and Kuitun Litai Silu Investment Co., Ltd. 3 )­  I N V E S T M E N T I N A N D F R O M B R I C O U N T R I E S I N 2015

In 2015, in accordance with national strategies, Xinjiang improved its policy and planning system for the building of the core area of the Silk Road Economic Belt, vigorously promoted major projects, and deepened economic and trade cooperation and people-to-people exchanges with BRI countries, achieving a good start for the core area development campaign. i)  Policy planning system taking shape. First, Xinjiang made a creative plan for the construction of the commerce, trade and logistics center of the core area of the Silk Road Economic Belt. Second, it compiled the guiding opinions and key tasks for the construction of the core area. Third, it sped up the preparation of special plans and policy research for the building of the core area. ii) Promoting major projects. First, Xinjiang improved the promotion mechanism for key projects. Second, it accelerated the progress of major infrastructure construction projects. Third, it actively made active efforts to advance overseas investment projects. It encouraged local enterprises to go global through hierarchical industrial transfer, clustered development and industrial park operation, sped up the construction of Zhongtai New Silk Road Agriculture and Textile Industrial Park and Li Hua Cotton Tajikistan Agricultural Park, forming a demonstration effect for transnational agricultural cooperation. It promoted the construction of Tacheng International Resources’ China–Tajikistan Industrial Zone, did a good job in the supporting work related to Hualing Industrial Park in Georgia, encouraged agricultural cooperation with Russia and Kazakhstan, and promoted the construction of agricultural industrial parks. It also supported the construction of the overseas projects of TBEA, Guanghui Energy, Sanbao Group and other enterprises. It provided high-quality supporting services for enterprises to go global, held an informal meeting on cross-border cooperation in consumer rights protection with Almaty State, Kazakhstan, and signed cooperation agreements on the protection of consumer rights with the consumers’ associations of the provinces of Hovd and Bayan Olgii, Mongolia, which helped avoid potential

238  Development overview investment risks and protect the legitimate rights and interests of the enterprises making overseas investment. iii)  Foreign economic and trade cooperation deepened. Xinjiang built cooperation platforms, improved cooperation mechanisms, and strived to expand economic and trade cooperation with BRI countries and push it up to a higher level. First, the construction of a platform for opening-up was advanced effectively. The construction of the economic development zones in Kashgar and Horgos advanced steadily. In 2015, the two zones completed RMB3.2 billion of infrastructure investment and attracted RMB9.9 billion of foreign investment. The construction of integrated bonded zones also progressed smoothly. The Kashgar Integrated Bonded Zone was put into operation, and the Urumqi Integrated Bonded Zone was approved by the central government. The Chinese supporting area of the China–Kazakhstan Horgos International Border Cooperation Center passed pre-assessment and acceptance and the import of complete vehicles started at Kashgar and Horgos ports. Second, foreign exchange activities increased. In 2015, Xinjiang successfully held the Eurasia Commodity and Trade Expo and contracts were signed for 149 projects involving a total investment of RMB126 billion. Xinjiang made every effort to run China Commodities Fair in Kazakhstan and other overseas exhibitions, actively organized enterprises to participate in major exhibitions at home such as the Investment and Trade Forum for Cooperation between East and West China, Tianjin Investment and Trade Fair and China (Xiamen) International Fair for Investment and Trade. As a result, a total of 362 project contracts were signed, with a total contractual investment of RMB201.8 billion. During October 15–17, 2015, Xinjiang Uygur Autonomous Region, on behalf of China, worked with Georgia to jointly hold the Silk Road Forum. It also hosted the International Symposium on the Silk Road Economic Belt, 2015 China Xinjiang Development Forum, and China–Pakistan Economic Corridor ­ (Karamay, Xinjiang) Forum. These large-scale forums further enhanced the influence of Xinjiang. The Eighth Meeting of the Xinjiang–Kyrgyzstan Working Group on Economic and Trade Cooperation and the Fourth Meeting of the Xinjiang–Tajikistan Committee on Economic and Trade Cooperation were ­ organized to further strengthen regional economic cooperation. Third, the number of westward international trains steadily increased. In 2015, the international freight train route between Xinjiang and Central Asia started market-oriented operation. Direct railway routes to Georgia, Russia and Germany were put into operation. There were altogether 80 westward international trains in operation, leading to Kazakhstan, Uzbekistan, Turkmenistan, Tajikistan, Kyrgyzstan, Russia, Georgia and Germany. Fourth, international people-to-people exchanges intensified. Xinjiang gave full play to the advantages of the close ties, shared language and similar culture with neighboring countries to strengthen cooperation and exchanges in such fields as culture, science and technology, education and medical services, consolidating the basis for communications and exchanges in various other fields.

Regional investment analysis report 2015  239 4 )  D E V E L O P M E N T T R E N D S A N D P R O S P E C T S F O R 2016

In 2016, Xinjiang will thoroughly implement the guiding principles of the third, fourth and fifth plenary sessions of the 18th CPC Central Committee, the Second Xinjiang Work Seminar of the State Council, the Central Economic Work Conference and the Tenth Plenary Session of the Eighth Xinjiang Autonomous Region Party Committee as well as the Party Committee’s Economic Work Conference, and the arrangements within the framework of the BRI. X ­ injiang will comply with the new trend of China’s deep integration into the world economy and fit into the economic new normal. It will adhere to concepts of innovationdriven, coordinated, green, open, and shared development, do all the work while keeping in mind the overarching goal of building the core area of the Silk Road Economic Belt, and comprehensively roll out the construction of the five major centers and the 10 import and export industrial clusters. X ­ injiang will promote opening-up toward both the east and the west, deepen mutually beneficial cooperation, expand effective supply and develop an open economy at a higher level, so as to ensure that new breakthroughs will be made at key points and in key areas in the construction of the core area of the Silk Road Economic Belt. First, it will improve the policy and planning system. Xinjiang will strengthen supporting policies, issue guiding opinions for the construction of the core area, define key tasks and responsibilities for the construction of the core area in 2016, and promote the implementation of various tasks. Second, it will strive to improve infrastructure connectivity. Xinjiang will promote the construction of key infrastructure projects such as roads, railways, civil aviation facilities, as well as the construction of international passageways leading to and from Xinjiang. It will improve the integrated transportation network within Xinjiang, and upgrade connections with neighboring countries. Third, it will promote the construction of free trade zones and integrated bonded zones. Xinjiang will cooperate with the relevant departments of the country to promote negotiations on joint construction of free trade areas with neighboring countries. The region will strengthen the construction of integrated bonded zones, speed up the construction of the bonded logistics park for import and export processing in the Chinese supporting area of the China–Kazakhstan Horgos International Border Cooperation Center, and strengthen the prior work for integrated bonded zones in Yining, Irkeshtam, Takeshken, Jeminay and Bakti to form an opening-up pattern where multiple key points are well connected and mutually supporting. Fourth, it will accelerate the construction of economic development zones in Kashgar and Horgos. Xinjiang will accelerate the construction of infrastructure and public service facilities in the two economic development zones. It will support the leading industries to realize rapid development according to the overall development plan of the two and the national industrial structure adjustment guidance catalogue. It will promote the PPP model and government purchase of services, expedite the implementation of the Interim Management Measures for the Pilot Program of Cross-Border RMB Loan Business in Xinjiang

240  Development overview Kashgar and Horgos Economic Development Zones. It will speed up infrastructure construction at Horgos and Irkeshtam ports, promote the construction of the Kashgar land port, and the international air ports of Kashgar and Yining. It will also promote the formal implementation of the new approach to customs clearance and inspection and quarantine at ports to improve customs efficiency. Fifth, it will promote the construction of a distribution center for China– Europe freight trains. Xinjiang is to complete the construction plan for the distribution center, build itself into an important starting point and transit center on the China–Central (West) Asia–Europe freight train routes, and deepen cooperation with relevant companies in all provinces and municipalities of China. Xinjiang will set up an alliance of China–Europe freight train platform operation companies, and establish a nationwide contact mechanism for all relevant enterprises. Sixth, Xinjiang will strengthen international capacity cooperation. Focusing on neighboring countries in Central Asia, West Asia and South Asia, Xinjiang will encourage and support local enterprises to expand overseas investment, promote international capacity and equipment manufacturing cooperation, and support sustainable and healthy economic development to realize industrial transformation and upgrading. The region will issue Implementation Opinions on Further Promoting Overseas Investment and Cooperation in International Capacity and Equipment Manufacturing, to guide the region’s capacity cooperation and exchange with the neighboring countries. Seventh, it will improve the capacity to deliver energy resources to other countries. Xinjiang will advance the ultra-high-voltage DC power transmission project, the construction of railways for resources development and the laying of oil and gas pipelines, so as to establish a comprehensive three-dimensional energy transmission network to improve its energy resource transmission capacity. It will also improve the prediction and analysis of the wind power and photovoltaic power markets and strive for technological breakthroughs, so as to promote large-scale development and utilization of new energy. Eighth, Xinjiang will actively build economic and trade cooperation platforms. Xinjiang will make an effort to deliver the Fifth China–Eurasia Expo and other domestic and foreign exhibitions, rely on Urumqi, Kashgar, Yining and other regional central cities to build a number of logistics centers and distribution centers, give full play to the existing mechanisms of economic and trade cooperation between local governments, and make good use of the policies related to the pilot program of cross-border RMB business, accelerate the construction of cross-border e-commerce public service platforms and e-ports, and vigorously develop cross-border e-commerce so as to provide a platform and support for deepening economic and trade cooperation with neighboring countries. Ninth, it will promote and extend people-to-people exchanges. Xinjiang will accelerate the construction of the Central Asian Cultural Exchange Center in ­Xinjiang and the Tourism Center of the Silk Road Economic Belt in Xinjiang, make efforts to do a good job in hosting the Asia–Europe Film Festival in Urumqi, build international exchange centers in Xinjiang Normal University, Xinjiang University of Finance and Economics and Xinjiang Medical University, encourage

Regional investment analysis report 2015  241 u­ niversities in Xinjiang to develop Sino–foreign cooperation p­ rograms, promote the construction of the China–Central Asia Science and Technology Cooperation Center, and continue to organize and implement a number of international ­scientific and technological cooperation projects developed by the country and the region. 11  Xinjiang Production and Construction Corps (XPCC) (1)  Recent policies of XPCC to promote inward and outward investment In accordance with the requirements of the NDRC’s Administrative Measures for the Approval and Registration of Overseas Investment Projects (NDRC Decree No. 9), and considering the actual situation of overseas investment by XPCC enterprises in recent years, XPCC formulated the Administrative Measures for the Approval and Registration of Overseas Investment Projects of Xinjiang Production and Construction Corps (XBF [2015] No. 6). According to the NDRC’s Catalogue of Investment Projects Approved by the Government, Administrative Measures for the Approval and Registration of Overseas Investment Projects, Decisions of the National Development and Reform Commission on Revising the Relevant Articles of the Administrative Measures for the Approval and Registration of Overseas Investment Projects, and the Circular of the State Commission Office for Public Sector Reform and the National Development and Reform Commission on the Prohibition of Setting Items for Independent Decision-making for Enterprises as Prerequisites for the Approval of Investment Projects, and in light of the actual situation of foreign investment in XPCC in recent years, XPCC formulated the Administrative Measures for the Approval and Registration of Foreign Investment Projects of the Xinjiang Production and Construction Corps (XBF [2015] No. 25). In accordance with the guiding principles of the Guiding Opinions of the State Council on Promoting International Cooperation in Production Capacity and Equipment Manufacturing (GF [2015] No. 30) and based on the practical needs of XPCC in promoting international production capacity and equipment manufacturing cooperation, XPCC formulated the corresponding implementation opinions. (2)  Inward and outward investment of XPCC in 2015 1 )  G R O W T H O F I N W A R D A N D O U T W A R D I N V E S T M E N T

Under the guidance of the national policy of “actively, reasonably and effectively” using foreign capital, XPCC made certain achievements in this regard. In 2015, there were five new foreign-invested enterprises approved with a total investment of US$346 million, 72% of which was foreign investment. The actual utilization of foreign capital amounted to US$268 million, a 17.1% increase over 2014. In 2015, up to 16 new overseas investment projects, one capital increment project, and 10 new overseas Chinese institutions were registered, and the

242  Development overview o­verseas investment of XPCC reached US$71.6 million. According to the Administrative Measures for the Approval and Registration of Overseas Investment Projects of Xinjiang Production and Construction Corps (XBF [2015] No. 6), and with the national registration system for overseas investment projects put in place, XPCC Development and Reform Commission confirmed the equity acquisition project of Xinjiang Ruyi Textile and Garment Co., Ltd. and accepted two overseas investment projects of Beixin Road & Bridge Group Co. Ltd. The total investment of these projects was US$78.5215 million. As such, XPCC made rapid progress in overseas investment. 2 )  S T R U C T U R E O F I N W A R D A N D O U T W A R D I N V E S T M E N T

Foreign investment was mainly utilized in food processing (100% foreign investment), new energy (100% foreign investment) and machinery manufacturing (100% foreign investment) industries, with the investment coming mainly from the Hong Kong SAR, the Cayman Islands, and the British Virgin Islands. In 2015, overseas investment of XPCC went to areas like agriculture, forestry, animal husbandry and fishery, construction, manufacturing, wholesale and retail sales, transportation and warehousing, and business services. The investment was mainly distributed in nine countries and regions including Tajikistan, Kyrgyzstan, Uzbekistan, Cuba, and the Hong Kong SAR. 3 )  P R O B L E M S

Although XPCC made progress in utilizing foreign capital and making overseas investment, compared with other provinces, municipalities and autonomous regions of China, it still lags behind in terms of the quantity, scale, quality and efficiency of relevant activities. First, there is a lack of knowledge on the international financial market and the ability of risk management. The repayment period of foreign loans is long and the interest rate is relatively low, but China does not have a system that can provide sufficient help for enterprises to better prevent risks related to foreign debts. Also, there is a lack of talents familiar with international capital operation, leading to exchange rate losses in some projects. The adjustment of the RMB exchange rate, the reform of the exchange rate determination system, and the reform of domestic and foreign trade systems, as well as the reform of the fiscal and taxation system and the price system have also caused policy-related losses for some projects supported by foreign loans. Second, the investment environment needs to be improved and the utilization of foreign capital grows only at a slow pace. The situation at home and abroad has led to an economic slowdown both at home and abroad, and resulted in decreased profitability and weak willingness to invest overseas on the part of enterprises. Infrastructure in various industrial parks are backward. At present, there are 29 industrial parks at or above the XPCC level, and many of them have only completed the preparation work for construction. Foreign capital and enterprises are therefore enabled to come and settle. Third,

Regional investment analysis report 2015  243 talent cultivation needs to be strengthened. There are inadequate high-quality professionals in XPCC for foreign investment attraction and many of the foreign investment contracts that have been signed cannot be actually performed. Fourth, the overseas investment of XPCC enterprises is still in its infancy, characterized by small number, small scale and low efficiency, and ­relevant enterprises are also inexperienced in international operation. Moreover, capital shortage, financing difficulties and high export credit premium for XPCC enterprises have also hampered the implementation of resources development projects and comprehensive agricultural development projects in neighboring countries in Central Asia. 4 )  D E V E L O P M E N T T R E N D S A N D P R O S P E C T S F O R 2 016

XPCC will fully implement the guiding principles of the 18th National Congress of the CPC, the second, third, fourth and fifth plenary sessions of the 18th CPC Central Committee and the Second Xinjiang Work Seminar of the State Council, and firmly grasp the strategic opportunities provided by the BRI, and drive development by further opening-up. XPCC will comprehensively improve its economic openness, implement a more proactive approach to opening-up, speed up the transformation of the development model, innovate in the pattern of opening-up, and adhere to the principle of gradual and steady development to improve the comprehensive advantages and overall benefits of foreign capital utilization. XPCC will accelerate the pace of its going-global efforts, and improve the ability to guard against international economic risks. It will keep up innovative thinking, strive to improve the investment environment, vigorously introduce advanced equipment, technology, concepts and management experience from the outside, and actively support foreign investment projects conducive to economic restructuring, industrial upgrading and job creation. XPCC will make more efforts to implement the strategy of opening toward the west, give full play to its organizational advantages, and support its enterprises to go global and make reasonable and effective use of foreign resources and markets. XPCC will strengthen the management of foreign investment projects and effectively improve the quality and benefits of foreign capital utilization. In 2016, XPCC expects to obtain US$274 million of foreign direct investment, US$55.92 million of foreign loans and make US$78.76 million of overseas investment. In order to do a good job in the utilization of foreign capital and in overseas investment, XPCC will work mainly in the following aspects. First, it will relax the access control for foreign investment, simplify management procedures, improve work efficiency and increase transparency. It will encourage foreign investors to invest in manufacturing, high-tech industries, modern services, new energy and energy conservation, as well as environmental protection; steadily expand the opening-up in the fields of finance, logistics, education, medical care and culture; guide foreign investors to participate in efforts to promote ecological progress and innovation-driven development;

244  Development overview support foreign-funded enterprises to enhance their innovation capabilities and deeply integrate into the development of XPCC; and guide foreign capital to flow into XPCC’s development priorities. Second, it will pay close attention to the domestic and foreign environmental conditions and trends in loan-granting from international financial organizations and foreign governments, make efforts to obtain foreign government loans and actively expand the size of loans from key countries such as the United States, Germany, Israel and France. It will pursue breakthroughs first in key fields such as energy conservation and emission reduction, industrial upgrading and social development, and in key areas such as cities, economic and technological development zones, and industrial parks, so as to promote the utilization of foreign capital in an all-round way. Third, it will rely on domestic and foreign markets and resources, give full play to the decisive role of the market, accelerate the improvement of resource allocation inside and outside Xinjiang, actively expand the development space, rely on the advantages of mineral resources in neighboring countries to support XPCC enterprises to participate in the development and utilization of mineral resources. It will let enterprises be main bodies in the going-global campaign through various forms such as export, foreign aid, labor export, overseas investment, as well as economic and technological cooperation. XCPP will seek a breakthrough in its going-global efforts by focusing on agriculture in an effort to participate in the construction of the Silk Road Economic Belt, and push forward outward development of agriculture in XPCC comprehensively. (3)  Investment in and from BRI countries in 2015 1 )  I N V E S T M E N T B Y B R I C O U N T R I E S I N X P C C

In 2015, the Hong Kong SAR invested US$223 million in XPCC, accounting for 83.2% of the total utilization of foreign investment. The investment all came from wholly foreign-owned enterprises, involving industries such as food processing, new energy and machinery manufacturing. 2 )  I N V E S T M E N T O F X P C C I N B R I C O U N T R I E S

In 2015, XPCC enterprises invested US$30.1078 million in BRI countries, the industries involved were, among others, construction, agriculture, forestry, animal husbandry and fishery, and manufacturing. The key participating enterprises were Xinjiang Beixin Road & Bridge Group, Xinjiang Production and Construction Corps Construction Engineering (Group) Limited Liability Company, Xinjiang Hengrui International Trade Co., Ltd., and Xinjiang Production and Construction Corps Design Institute. The investment went mainly to eight countries and regions including Tajikistan, Kyrgyzstan, Uzbekistan, and the Hong Kong SAR.

Regional investment analysis report 2015  245 12 Ningxia (1)  Recent policies of Ningxia to promote inward and outward investment In order to implement that guiding principles of President Xi Jinping’s series of important speeches, take the initiative to participate in the implementation of the BRI and speed up the opening-up, Ningxia issued a series of policies to provide support and build platforms for opening-up. In the space of a year, three policy documents were issued, playing an important role in promoting the development of inward and outward investment in an open Ningxia. In July 2015, the Sixth Plenary Session the Eleventh CPC Committee of Ningxia Hui Autonomous Region adopted Opinions on Participating in the Implementation of the Belt and Road Initiative and Speeding up the Construction of an Open Ningxia (NDF [2015] No. 22). The document clearly defined the overall requirements and objectives of the construction of an open Ningxia, and proposed that Ningxia should always combine further opening-up with deepening the reform, bringing-in with going-global, and all-round opening-up with key breakthroughs, making good use of the two golden platforms, i.e., the inland opening-up pilot economic zone and the China–Arab States Expo, and strive to level up the opening-up of Ningxia to the outside world. In October 2015, the General Office of the People’s Government of Ningxia Hui Autonomous Region issued Several Opinions of the General Office of the People’s Government of Ningxia Hui Autonomous Region on Supporting the Going Global of Enterprises (NZBF [2015] No. 138), which is an important supporting document of the Opinions on Participating the Implementation of the Belt and Road Initiative and Speeding up the Construction of an Open Ningxia. In July 2016, the General Office of the People’s Government of Ningxia Hui Autonomous Region issued the Three-year Action Plan for Accelerating the integration of Going Global Efforts into the Belt and Road Initiative (2016–2018) (NZBF [2015] No. 116). Centering on speeding up the pace of going-global, the plan detailed the work for Ningxia’s going-global campaign in the next three years, made a clear division of responsibilities and tasks for all departments, and called for building a carrier for foreign economic and trade cooperation, and speeding up economic and trade investment cooperation, expand areas of cooperation, establish a database of BRI cooperation projects, smooth the channels for economic and trade cooperation, increase fiscal, taxation, financial and policy support for going-global, and improve cooperation environment. (2)  Inward and outward investment of Ningxia in 2015 1 )  G R O W T H O F I N W A R D A N D O U T W A R D I N V E S T M E N T I N 2015

In 2015, Ningxia’s actual utilization of foreign capital amounted to US$210 million, a 50.5% year-on-year increase. It absorbed US$180 million of

246  Development overview foreign direct investment, a 101.6% year-on-year increase, and used US$30 million of foreign loans, a decrease from 2014. In 2015, the region’s overseas investment reached US$1.45 billion, a 310% year-on-year increase. More than 90% of this was for three major projects (including the acquisition of Shanda Games Limited) carried out by Ningxia Zhongrong Legend Equity Investment Partnership Enterprise, and Ningxia Yilida Capital Investment Limited Partnership. All other outward investment projects were still small projects with investment in the millions. 2 )  S T R U C T U R E O F T H E I N W A R D A N D O U T W A R D I N V E S T M E N T

i)  Utilization of foreign capital. In 2015, there were 37 new foreign investment projects in Ningxia, a 68% increase over 2014. The contractual foreign investment came to US$1.018 billion, a sharp increase of 1.7 fold from the previous year, laying a solid foundation for the actual utilization of foreign capital in 2016. Foreign investment projects mainly covered manufacturing (processing of wine, cashmere textile products, halal food production, new energy and metallurgy), power, heat, gas and water production and supply (operation of oil and gas stations, sewage recovery and utilization), construction and operation of sports facilities, development and utilization of water-efficient irrigation technology, etc. Manufacturing and energy sectors have become key areas of investment, contributing more than 60% of the foreign investment projects. In terms of investment sources, the Hong Kong SAR was the largest contributor with 20 projects, 54% of the total. Four projects were invested in by US companies, four by Malaysian companies, three by Taiwanese companies. Yemen, Israel, Egypt, Jordan, Australia, and France each contributed one project. Active foreign investment promoted the development of relevant industries, enriched the content of foreign investment in Ningxia, and raised the level of foreign capital utilization. ii) Overseas investment. In 2015, overseas investment of Ningxia exceeded, for the first time, the foreign investment it received. Overseas investment activities were very active, producing a number of leading overseas investment enterprises such as Ningxia Zhongyin Cashmere International Group Co., Ltd. and Ningxia Diantong. Investment mainly went to cashmere textiles, crop cultivation, building materials, and metallurgy, presenting a diversified investment portfolio. The number of destination countries and regions increased as Cambodia, the United States, the United Kingdom and Oman joined the list. 3 )  P R O B L E M S

i)  Foreign investment. First, in 2015, foreign investment came in for large projects early in the year and the total amount of foreign investment soon exceeded that of 2014, but when such big projects were included the overall growth of FDI was not significant. Second, Ningxia’s economy is small in scale, with an unreasonable industrial structure and an ordinary innovation-driven development

Regional investment analysis report 2015  247 capacity, plus a serious shortage of innovative, interdisciplinary, foreign-oriented talents, which hindered foreign investment attraction. Third, affected by the slow recovery of the international economy and the backflow of the manufacturing industry to developed countries, large amounts of foreign investment concentrated in the processing of agricultural and sideline products, dairy products, textiles, metallurgy and energy, while little investment was directed to emerging industries such as high-tech industries, big data, health and elderly care, which made it difficult for Ningxia to attract more foreign capital. ii) Overseas investment. First, the overall strength of overseas investment of Ningxia did not increase significantly, and large-scale overseas investment projects came more or less by chance. Except for several large projects, most overseas investment projects of Ningxia were small ones worth millions. The overall growth of overseas investment was not obvious, and the stability and sustainability was limited. Second, overseas investment concentrated in a few areas such as textiles, agriculture, construction, and building materials. The cooperation with overseas enterprises in high-tech projects did not progress much. Third, the overall strength of going-global enterprises was comparatively weak. Although Ningxia enterprises showed advantages in iron and steel, electrolytic aluminum and cement and relevant enterprises had a strong desire to go global, they faced problems such as competition from peer enterprises in China, and weak ties with targeted countries and regions. Apart from these, overseas investment enterprises had no connection with one another, and their projects were scattered, with no clustering effect. 4 )  D E V E L O P M E N T T R E N D S A N D P R O S P E C T S F O R 2016

In 2016, Ningxia will focus on the building of an open Ningxia, actively participate in the implementation of the BRI, make efforts to enhance the capacity to support open economic development, improve infrastructure connectivity, build highly influencing platforms for opening-up, and promote coordinated development of economic and cultural communication. The target of total foreign capital utilization for 2016 is US$264 million, an increase of 21%. This includes US$214 million in FDI, an increase of 15%, US$50 million of foreign loans, up 64%. The scale of overseas investment is expected to be around the same as in 2015. First, Ningxia will continue to do a good job in the management and guidance of foreign investment projects. In view of the transformation of the foreign capital project management model, the autonomous region will further streamline administration and delegate power, improve procedures, reduce discretion in power use, continue to provide high-quality investment consulting services to enterprises, and strive to attract and implement more foreign capital projects. In light of the problems faced by the development and reform departments at city and county levels, such as the shortage of foreign investment projects, lack of experience and full-time personnel, Ningxia will continue to strengthen guidance and training so as to help these departments build their capacities to attract foreign investment so that they can bring more foreign investors to Ningxia.

248  Development overview Second, it will accelerate the construction of overseas industrial parks. Ningxia will combine the BRI, the opening-up strategy and the international capacity cooperation initiative, study key issues associated with Ningxia’s foreign capital utilization and overseas investment, give effective assistance to the construction of overseas industrial parks, and accelerate the construction of overseas industrial parks such as the China–Oman and China–Saudi Arabia industrial parks and the Mauritania agricultural cooperation park. Third, Ningxia will actively guide and support the development of advantageous industries, promote the active participation of large and medium-sized enterprises in the international division of labor, build a number of overseas industrial parks as well as economic and trade cooperation zones in BRI countries and regions, so as to encourage Ningxia’s advantageous industries like power generation and transmission, metallurgy, the chemical industry, equipment manufacturing, building materials, and modern agriculture, to go global. It will encourage enterprises to take technologies and standards abroad, explore foreign markets, and seek win–win cooperation. It will encourage qualified enterprises to establish cooperative R&D institutions abroad, hire and attract local scientific and technological talents, conduct transnational scientific and technological R&D cooperation, enhance the core competitiveness of enterprises in overseas markets, so as to build the momentum for going-global and achieve sustainable development. (3)  Investment in and from BRI countries in 2015 1 )  I N W A R D A N D O U T W A R D I N V E S T M E N T

In 2015, Ningxia actively promoted inward and outward investment in and from BRI countries. Ningxia Zhongyin Cashmere International Group Co., Ltd. actively increased investment to textile facilities in Cambodia, Ningxia Diantong succeeded in acquiring an American company, Ningxia Zhongrong Legend Equity Investment Partnership Enterprise and Ningxia Yilida Capital Investment Limited Partnership continued their acquisition of Shanda Game Limited, Ningxia and Oman reached consensus on building the China–Oman Industrial Park, and progress was smooth toward building an agricultural park and a marine industrial park in Mauritania. 2 )  D E V E L O P M E N T T R E N D S A N D P R O S P E C T S F O R 2016

In 2016, Ningxia will accelerate the implementation of its opening-up strategy, strive to build a new open inland economic system, and actively promote the development of inward and outward investment. First, it will actively build a carrier for economic and trade cooperation, guide and support local enterprises in agriculture, animal husbandry, textile and garment, equipment manufacturing, food processing, energy and other industries to make industrial investment and launch M&A projects in BRI countries,

Regional investment analysis report 2015  249 support entities and enterprises, including the Yinchuan Economic and Technological Development Zone, to take the lead in building overseas industrial cooperation zones as well as economic and trade cooperation zones in Saudi Arabia, Oman, Mauritania and the United Arab Emirates. Second, it will enhance economic, trade, and investment cooperation in line with the going-global strategy. It will help enterprises make overseas investment, expand overseas project contracting and labor cooperation, motivate local enterprises to carry out infrastructure construction, geological and mineral exploration, mining and other businesses in Africa, Central Asia and Southeast Asia, and promote overseas project contracting. It will also carry out international capacity cooperation, actively motivate Ningxia enterprises who have advantageous capacity in areas of iron and steel, electrolytic aluminum, ferroalloy, cement, and plate glass to establish overseas production bases in BRI countries in Central Asia and West Asia, in order to promote the orderly transfer of Ningxia’s advantageous industrial capacities abroad and enhance international capacity cooperation. Third, it will create a BRI economic and trade cooperation project database. The database will contain projects of three categories, i.e., projects under construction, proposed projects and candidate projects. It will be updated regularly and contain a list of key enterprises to be supported. Projects will mainly come from key fields such as infrastructure, advantageous industries, and economic and trade cooperation. Fourth, Ningxia will smooth the channels for overseas economic and trade cooperation. It will encourage large and medium-sized state-owned enterprises to cooperate with small and medium-sized enterprises, institutions of higher learning and scientific research institutes to go global in clusters. It will support local enterprises to establish strategic partnerships with backbone Chinese enterprises with international presence, related foreign enterprises and chambers and associations of commerce, so that these enterprises may set up branches in Ningxia and push local enterprises abroad. Ningxia will also speed up the construction of overseas marketing networks and give better play to the functions of its overseas representative offices for economic and trade cooperation. Fifth, it will increase fiscal, taxation, financial and policy support for outward investment. It will increase financial and policy support, and give appropriate subsidies to enterprises working on greenfield investment projects overseas, resources development, cross-border M&A, marketing networks, etc. It will offer tax cuts to going-global enterprises for their income generated abroad according to law. The overseas income of high-tech enterprises may enjoy preferential income tax policies according to relevant regulations. Ningxia will also strengthen the financing matchmaking services, and improve financing insurance services. Sixth, it will further facilitate inward and outward investment. It will further improve the workflow for foreign investment and overseas investment, simplify the procedures for review and approval of investment projects as well as the approval and filing of enterprises, promote the facilitation of foreign investment and overseas investment, and improve the efficiency of review and approval.

250  Development overview Seventh, it will strengthen talent cultivation. Ningxia will encourage enterprises to cooperate with universities, trade associations and scientific research institutes to cultivate a number of interdisciplinary talents for transnational business management and R&D, actively introduce high-level overseas talents for transnational management and R&D, and establish a BRI expert database.

(IV)  Northeast China 1 Liaoning In 2015, Liaoning Province thoroughly studied and implemented the spirit of the various documents of the CPC Central Committee and the State Council, conscientiously implemented the decisions, arrangements and deployment of the CPC Liaoning Provincial Committee and the People’s Government of Liaoning Province, adopted a more proactive opening-up strategy, and actively responded to the challenging and complicated development situation at home and abroad. The province made full use of the stimulating effect of foreign investment on the economy. The scale of foreign loans remained stable, and the channels of lending diversified. The growth momentum of overseas investment was strong with investment quality constantly improved, promoting the economic and social development on the whole. (1)  Relevant policies of Liaoning to promote inward and outward investment In order to implement the Guiding Opinions of the State Council on Promoting International Cooperation in Production Capacity and Equipment Manufacturing (GF [2015] No. 30) and the Country-Specific Plan for International Production Capacity and Equipment Manufacturing Cooperation formulated by the NDRC and the Ministry of Foreign Affairs (FGWZ [2015] No. 2588), Liaoning Province further strengthened the cooperation in international production capacity and equipment manufacturing between key BRI countries, promoted the export of products, industries and capital from the province and did a good job in pairing up with a BRI country. In accordance with the requirements of the provincial government, and in line with the Implementation Plan for Promoting International Capacity and Equipment Manufacturing Cooperation in Liaoning Province (LZF [2015] No. 26), Liaoning Province drafted the work plan for the implementation of the Country-Specific Plan for International Production Capacity and Equipment Manufacturing Cooperation, which is currently being revised and improved. (2)  Inward and outward investment of Liaoning in 2015 1 )  U T I L I Z A T I O N O F F O R E I G N C A P I T A L

In 2015, there were 475 new foreign-invested enterprises approved in Liaoning Province, down 0.6% year-on-year; foreign direct investment stood at

Regional investment analysis report 2015  251 US$5.19 billion, down 34.4%; contractual foreign investment totaled US$6.84 billion, down 25.5% year-on-year. From the perspective of the sources of foreign capital, the Hong Kong SAR contributed a total of US$4.13 billion, 79.6% of the total. Foreign investment from Singapore was US$250 million, up 11.5%, and US$240 million came from Japan. In terms of the destination industries, the real estate industry was the top contributor, and the performance of the modern services industry was also outstanding. The real estate industry utilized US$2.7 billion of foreign capital, a 12.8% year-on-year decline, accounting for 52% of the province’s total; the modern services industry received US$960 million, which was a 59% year-onyear decrease; equipment manufacturing utilized US$530 million of foreign capital, a 61% decrease from the previous year. At the city level, Dalian and Shenyang took the vast majority of the province’s total foreign investment. Dalian used US$2.7 billion, a 9.9% year-on-year increase, accounting for 52% of the province’s total, playing a more prominent leading role; while Shenyang utilized US$1.06 billion, a 53% decrease from a year earlier, accounting for 20% of the province’s total. Tieling used US$170 of million foreign capital, an increase of 5%, which was outstanding performance. 2 )  O V E R S E A S I N V E S T M E N T

In 2015, Liaoning enterprises established 178 overseas facilities. The total contractual investment was US$4.421 billion, a 25.53% year-on-year growth, with the investment from the Chinese side amounting to US$3.817 billion, which was a 15.63% year-on-year increase. 3 )  D E V E L O P M E N T T R E N D S A N D P R O S P E C T S F O R 2 016

Although there are still some uncertain and unstable factors in the domestic and foreign economic environments, more positive factors are in place for expanding the inward and outward investment of Liaoning in terms of policies, economic conditions and environment. The expectation is that in 2016, foreign investment in Liaoning will increase steadily, the structure will improve, overseas investment will continue to grow rapidly, and the internationalization and comprehensive competitiveness of the province’s economic development will be enhanced. (3)  Investment in and from BRI countries in 2015 1 )  I N V E S T M E N T I N B R I C O U N T R I E S

Investment of Liaoning in BRI countries increased rapidly in 2015. The province approved US$857 million of investment in BRI countries in 2015, mainly in Russia. Large-scale overseas capacity transfer projects produced an obvious driving effect. The province’s metallurgical, energy, mining, building materials and

252  Development overview petrochemical industries all transferred production capacity abroad. For example, Liaoning Yongcheng Economic and Trade Development Co., Ltd. built a chemical fertilizer production plant in Russia, and Liaoning Wolf ­Petroleum Equipment Co., Ltd. established a drilling rig and equipment manufacturing park in Russia. Liaoning enterprises sped up their acquisition of high-quality overseas assets, brands and advanced technologies. For example, Liaoning Chuncheng Industrial and Trade Group Co., Ltd. acquired Noel Group Co., Ltd. in Kyrgyzstan. 2 )  D E V E L O P M E N T T R E N D S A N D P R O S P E C T S F O R 2016

As the largest developing country in the world, China enjoys political and social stability and huge market potential. It is still one of the most favored destinations for foreign investment. Liaoning expects to see further development in inward and outward investment in 2016. First, the dividends of various national structural reforms will be released further, and the conditions for further opening-up will be more mature. The central government issued Several Opinions of the State Council on Further Promoting the Utilization of Foreign Investment, continuously revised and ­ improved the measures for the administration of foreign investment and overseas investment, increased support for the utilization of foreign capital and overseas investment, and further streamlined administration and delegated power, as well as expanded the scope of opening-up. Reform has been deepened in an all-round way in Liaoning, and the business environment has been improved. In addition, China (Shanghai) Pilot Free Trade Zone has made preliminary achievements and its experience will be replicated and popularized throughout the country. Second, China’s economic transformation is to deepen, promoting its opening-up to the outside world. In 2016, it is expected that China’s economy will continue to see steady growth, with more driving force coming from structural adjustment. Economic growth will be based more on quality, structure and efficiency. All provinces will pay more attention to the comprehensive advantages and overall effects of the utilization of foreign capital. Liaoning will introduce advanced technology, talents and management experience through the introduction of foreign capital, pay more attention to the role of overseas investment in resolving the problem of excess capacity and alleviating environmental pressure, and obtain foreign energy resources through overseas investment to transfer surplus production capacity. Opening-up will play a more prominent role in the economic transformation and development of the province. Third, regional development strategies will be further implemented and there will be more space for opening-up. China will accelerate the implementation of the BRI and promote the construction of the Asian Infrastructure Investment Bank. This will help Liaoning Province win support from the national level and enable it to further expand the space for foreign cooperation. Liaoning Province will make every effort to promote major going-global projects, and enhance its capability to absorb international industrial capacities, capital, technologies and

Regional investment analysis report 2015  253 talents. Foreign cooperation industrial parks such as the China–ROK Free Trade Zone and China–Germany Equipment Manufacturing Industrial Park will be developed with intensified efforts so that they can become platforms for resource accumulation and gather enterprises along entire industry chains, contributing more to the opening-up of Liaoning. 2 Dalian In 2015, against the backdrop of the sluggish recovery of the global economy and the economic new normal of China, Dalian seized major historical opportunities such as the BRI, and the new round of efforts to revitalize Northeast China. Firmly targeted at innovation-driven development and following the general principle of making progress while maintaining stability, Dalian made active and innovative attempts to improve quality and efficiency, pursue steady growth and achieve a more balanced structure of inward and outward investment. Remarkable results were achieved. (1)  Inward and outward investment in 2015 1 )  U T I L I Z A T I O N O F F O R E I G N C A P I T A L

In 2015, 222 foreign-invested enterprises were established in Dalian, with a new contractual foreign investment of US$2.52 billion, an increase of 127.3% from the previous year; and the actual utilization of foreign capital was US$2.703 billion, an 8.1% year-on-year increase. In 2015, Dalian actively reinforced its appeal to traditional markets and actively explored emerging markets in BRI countries, hosting investment promotion activities in 16 countries and regions, including Japan, the Republic of Korea, Europe, the Hong Kong SAR, Singapore, Malaysia, Sri Lanka, Kazakhstan, Belarus, and Turkey. The efforts were quite fruitful. Progress was made in projects such as the Phase II project of Intel Dalian Lab, the Panasonic automotive battery project, Phase II of the Pfizer project, Goodyear’s “Dragon Five” project and R&D center and a number of new projects landed in the city, including ­Samsung’s biopharmaceutical project, the project of Hanwha Group’s financial services division, the second complex of Pavilion Dalian, the Pacific Place, the Detroit electric vehicle project, and the Goodyear aircraft tire project. Taking the Summer Davos meeting as an opportunity, Dalian planned and organized a series of activities such as signing ceremonies, high-level meetings and industry-themed tours. Contracts were signed for 13 major projects, including the Goodyear Dalian Phase V expansion project and Magnum International speedway, securing a total foreign investment of US$1.7 billion. At China International Software & Information Service Fair, Dalian CIMM Group, Jinzhou New District and Zaamor Diamonds of India signed a cooperation agreement. Dalian Jinzhou New District reached a cooperation intention with Etsuyou Tsusyou Co., Ltd. to build a cross-border e-commerce platform and a warehousing and logistics base. Dalian

254  Development overview Eco-Tech Innovative City signed a cooperation agreement with Wipro Co., Ltd. to build a software and service outsourcing delivery center. Dalian Sun-good TCM Hospital Co., Ltd. and Neusoft Corporation joined hands with a trade company in Azerbaijan for a long-distance heath care platform project. Large foreign investment projects played an important role in accelerating the transformation and upgrading of traditional industries and promoting the development of strategic emerging industries. Dalian actively attracted foreign investment into leasing, with 31 foreigninvested financial leasing enterprises approved in 2015, involving US$460 million of foreign investment, an increase of 210% and 88.5% respectively over 2014. Projects in this regard include Yizheng Financial Leasing Co., Ltd., Houying Financial Leasing Co., Ltd., Great China Honor Financing Limited, Yaoshun Financial Leasing Co., Ltd., Chunde Financial Leasing Co., Ltd. and more. These projects effectively promoted the development of Dalian’s real economy and small and medium-sized enterprises. Dalian constantly improved its platforms for opening-up. Policies were improved continuously and Several Opinions on Promoting a New Round of Opening up was issued as an overarching guide for Dalian’s opening-up during the 13th Five-Year Plan period. The Jinpu New District played a central role in the city’s opening-up, and efforts to improve the management system and mechanism of the district advanced in an orderly way. The State Council formally approved the change of Pulandian from a city to a district. Dalian ­actively learned the experience of the China (Shanghai) Pilot Free Trade Zone, launched eight institutional innovations and carried out in-depth research on the planning and layout of the proposed Dalian free trade zone, moving forward in its effort to submit the proposal. The 19 key coastal industrial parks moved faster forward in infrastructure construction and industrial cluster development. In the year, investment in fixed assets in the 19 parks reached RMB273.625 billion, accounting for 59.5% of Dalian’s total, and the actual utilization of foreign capital amounted to US$1.05 billion, accounting for 38.9% of Dalian’s total. 2 )  O V E R S E A S I N V E S T M E N T

In 2015, Dalian approved 108 overseas investment projects, and the contractual investment from the Chinese side totaled US$3.356 billion, a 17.5% year-onyear increase. Dalian organized and implemented various promotion activities. First, it organized enterprises to participate in investment policy briefings and matchmaking events held in Dalian by authorities of Russia, the United States, the Czech Republic, Poland, the United Kingdom, Romania, Tanzania, Uganda and other countries. Second, Dalian held symposiums of government agencies, enterprises and banks to explain national policies, guide enterprises to explore the international market, and help enterprises obtain the support from banks and credit insurance companies. Third, it hosted project promotion and economic

Regional investment analysis report 2015  255 and trade events in BRI countries like Kazakhstan, Belarus, Turkey, Malaysia, and Sri Lanka. These activities helped China Dalian International Economic & Technical Cooperation Group launch infrastructure projects in Malaysia and Sri Lanka to build highways, ports, affordable housing and solid waste treatment facilities in cooperation with local partners. Dalian Guangshengyuan Industrial Co., Ltd. built a rail transport industrial park in Kazakhstan, Dalian Machine Tool Group proposed to build a factory in the China–Belarus Industrial Park, and Dalian CIMM Group signed a contract with Kazakhstan’s CACM Project Investment Company. Dalian supported local enterprises to carry out overseas project contracting. The city supported and pushed for the establishment of an alliance of international project contractors, creating a new mode of information-sharing, cooperation, clustered overseas operation, and joint contracting of major overseas projects. ACRE Coking & Retractory Engineering Consulting Corporation signed contracts for two coking projects with an iron and steel company affiliated to Tata Group of India, and a number of contracted overseas projects worth more than US$100 million commenced construction, including the oil terminal and liquefied gas storage tank project in Jordan undertaken by China Dalian International Economic & Technical Cooperation Group; more projects of a similar scale are in the making, including the highway construction project in Myanmar undertaken by China Dalian International Economic & Technical Corporation, the power plant construction project in Kuwait undertaken in cooperation with State Power Investment, and the Khabarovsk wharf project in Russia undertaken by Dalian Huarui Heavy Industry Group Co., Ltd. (2)  Development trends and prospects for 2016 In 2016, Dalian will adhere to the new development concepts of innovationdriven, coordinated, green, open and shared development, participate in global economic cooperation in an all-round way, strive to create an innovative investment facilitation service system and mechanism, explore new ways to open further up, and promote the upgrading of investment models and expand new investment space to create new advantages for opening-up. The actual utilization of foreign capital is expected to be no less than US$3 billion, and the contractual overseas investment from the Chinese side is to increase by 10% over the previous year. First, Dalian will strive to open up new space for its opening-up. It will make greater efforts to replicate and promote the experience of the pilot free trade zones in Shanghai, Tianjin, Fujian and Guangdong, and speed up the exploration and make more breakthroughs in terms of foreign investment management based on negative list, the trade supervision system focusing on trade facilitation, the financial innovation system aiming to realize, in the course of opening-up, capital account convertibility and opening-up of the financial services industry. It will expand the platform for opening-up based on the BRI and the new round of

256  Development overview Northeast revitalization campaign. The city will produce a sound development plan for its participation in the implementation of the Belt and Road Initiative and form a new pattern of opening-up, accelerate the formation of a project catalogue for opening-up, and economic and trade cooperation with BRI countries to tap into new space for Dalian’s opening-up. In accordance with Several Opinions on Promoting a New Round of Opening up, Dalian will speed up the cultivation of new competitive advantages for its participation in and leadership in international economic cooperation so as to push its opening-up and development to a higher level and a broader stage. Second, Dalian will create a new landscape in investment attraction. It will reinforce its appeal to traditional markets such as Japan, the Republic Korea and the Hong Kong SAR, actively expand important new markets like Europe, the United States, Singapore and Taiwan, China, and vigorously tap into emerging markets such as Australia, Southeast Asia and South America. It will take into consideration the industrial advantages of relevant countries and regions and effectively match them with Dalian’s development needs, and plan and organize a new round of overseas investment attraction activities. It will continue with the work of attracting foreign investment within China, and organize investment attraction activities in the Beijing–Tianjin–Hebei region, the Yangtze River Delta, the Pearl River Delta and other areas where headquarters of foreign enterprises concentrate so as to attract investment from these headquarters. The city will step up its efforts to secure major foreign investment projects, launch Dalian’s action plan for “Made in China 2025,” give priority to investment projects in modern services industries such as finance, commerce, logistics, cultural creativity, industrial real estate, tourism, medical care and senior care, and do more to bring in projects in petrochemical, equipment manufacturing, shipbuilding, information, clothing and other industries conducive to the transformation and upgrading of traditional industries. It will encourage foreign investment in strategic emerging industries such as integrated circuits, energy storage technologies, industrial robots, new materials, bioengineering, energy conservation and environmental protection, vigorously promote foreign cooperation in projects relating to infrastructure and public services, such as ports, roads and bridges, and waste disposal. In line with the development orientation of key industrial parks, the city will vigorously promote themed investment attraction, industry chain investment attraction and industrial cluster investment attraction. The Jinpu New District will target its investment attraction efforts at the electronic information industry represented by the integrated circuits industry, strategic emerging industries such as ­biopharmaceuticals and new energy, and advanced equipment manufacturing represented by CNC machine tool, automobile and spare parts, as well as modern services such as shipping, logistics and international trade. Changxing Island will focus its investment attraction work on the petrochemical and marine equipment industry, Dalian High-tech Industrial Zone will take software and information outsourcing and finance as the priority in its investment attraction efforts. Investment attraction of other key industrial parks will be in line

Regional investment analysis report 2015  257 with their specific direction of industrial development. Dalian will actively introduce new ways to utilize foreign capital, including through financial leasing, commercial factoring, venture capital, industrial investment funds, PPP, Internet-plus initiatives, M&A, and the mixed ownership reform of stateowned enterprises. Third, Dalian will build a new stage for international cooperation. It will actively encourage local equipment manufacturing enterprises to participate in international capacity cooperation, and gradually establish an effective mechanism for enterprises to go global in a government-driven, enterprise-led and commercially feasible way so as to help enterprises explore the international market. It will guide enterprises to seek funding from the Silk Road Fund and Asian Infrastructure Investment Bank and help obtain financial support from China Development Bank and China Export and Credit Insurance Corporation. It will coordinate with trade associations and other service organizations to establish service systems, and establish regular contacts with China’s overseas business organizations and embassies of other countries in China, and provide all-round services for enterprises to participate in international capacity cooperation. It will give full play to the advantages of the clustering effect of the alliance of international project contractors, shift from single project contracting to integration and general contracting, and from the low-level, low-profit areas at the lower end of the value chain to high-tech, high-profit and high-valueadded fields, so as to promote the export of proprietary technologies, mechanical and electrical products and complete equipment. Fourth, Dalian will create a new pattern covering the whole city. It will adhere to the concept of all-round and in-depth opening-up and strive to level up its full-covering opening-up. The city will further promote the improvement and integration of special customs supervision areas, seek to establish a comprehensive bonded zone on Changxing Island and accelerate the construction of and investment attraction to the bonded zone. It will accelerate the transformation and upgrading of municipal industrial parks, and based on the demands of the existing municipal industrial parks and the requirements of the city’s opening-up, step up the promotion efforts, strive to upgrade most parks into provincial-level ones, and maintain the city’s leading position in Liaoning Province in terms of the quantity of upgraded parks. It will also promote the overall construction of the key coastal industrial parks to a new level. 3 Jilin In 2015, Jilin Province made great efforts to cope with the complicated situation and various challenges at home and abroad. Based on the BRI, the province vigorously promoted the infrastructure connectivity with neighboring countries, actively carried out investment attraction activities, and persisted in combining going-global with bringing-in. The utilization of foreign capital maintained a steady growth, and new breakthroughs were made in overseas investment.

258  Development overview (1)  Utilization of foreign capital 1 )  F O R E I G N D I R E C T I N V E S T M E N T

In 2015, a total of 70 new foreign-invested enterprises were approved in Jilin, down 35.19% year-on-year; the contractual foreign investment total was US$11.9360 billion, down 23.24% from a year earlier. Among the new foreignfunded enterprises, there were 14 projects with more than US$5 million of contractual foreign investment, and the total contractual foreign investment amounted to US$478.09 million; there were 11 projects involving more than US$5 million worth of foreign capital increment contracts and their contractual foreign capital was US$523.77 million. The actual utilization of foreign capital was US$8.572 billion, a 12.01% ­year-on-year increase including US$2.127 billion in FDI, representing an 8.19% year-on-year growth. In 2015, major foreign capital sources for Jilin were the Hong Kong SAR, the Republic of Korea, Germany, Taiwan of China, Singapore, Luxembourg, the United States, etc. Investment from these countries and regions accounted for more than 80% of the total FDI in the province. Foreign capital from the Republic of Korea, Taiwan of China, the United States and the British Virgin Islands grew significantly. In 2015, the distribution of FDI in Jilin Province was as follows: The primary industry received US$43.1 million, accounting for 2.0% of the total; the secondary industry received US$164.773 million, 77.5% of the total; and the tertiary industry received US$43.664 million, 20.5% of the total. FDI in the primary industry went mainly to agriculture, while that in the secondary industry went mainly to the manufacturing of transport equipment, gas, chemical raw materials and chemical products, pharmaceuticals, food and non-food agricultural products. FDI in the tertiary industry mainly went to finance, real estate, leasing and business services, catering, wholesale and retail sales. Over 85% of the foreign-funded enterprises were established in Changchun, Jilin, and Yanbian. 2 )  F O R E I G N L O A N S

In 2015, Jilin Province welcomed five foreign loan projects and used US$77.35 million of foreign capital. These included one project funded by loans from international financial organizations, i.e., the World Bank’s agricultural product quality and safety project with a loan of US$11 million; while the other four involved foreign government loans, using a total of US$66.35 million, including a US$20 million loan from the Israeli government for six hospitals in Changchun to introduce medical equipment, an Israeli government loan of US$27 million for the First Hospital of Jilin University used, an Israeli government loan of US$9.9 million for Baicheng Central Hospital, and a teaching equipment project of Changchun Automobile Industry Institute supported by a loan from Austria totaling EUR7 million.

Regional investment analysis report 2015  259 (2)  Overseas investment In 2015, Jilin enterprises set up 90 overseas institutions and enterprises. Among them, there were six overseas institutions and 84 overseas enterprises, with a contractual investment from the Chinese side of US$1.343 billion. In addition, there were three filed overseas investment projects with a total investment of US$1.152 billion. The investment mainly went to mineral resources development, or more specifically copper-nickel mines, nickel iron ores and coal mines, and the major investment destination countries were Canada, Indonesia and Russia. The projects were the following: Jilin Ji En Nickel Industry Co., Ltd.’s capital increment project of US$421.67 million for construction of Canadian Royalties Inc.’s Nunavik cooper and nickel mine project, Jilin HOROC Group Co., Ltd.’s US$280 million investment in Indonesia for a nickel-iron project, Jilin Huafeng Energy Group Co., Ltd.’s US$450 million coal mine project in Primorskiy, Russia, with US$270 million of the investment coming from the Chinese side and US$3.4 million of prior expenses. (3)  Basic ideas for inward and outward investment of Jilin in 2016 In 2016, Jilin will firmly grasp the important opportunities arising from China’s implementation of the BRI and the revitalization strategy for old industrial bases in Northeast China, focus on the actual conditions of the province, adhere to ­science-based and innovation-driven development, and further build, use and create comparative advantages. It will focus on key countries and regions, give priority to key industries and areas, rely on key projects, vigorously promote international capacity and equipment manufacturing cooperation, come up with new ideas and methods, strengthen the construction of investment platforms, and adhere to the combination of bringing-in and going-global strategies. The province will explore new sources of foreign investment and new ways to utilize foreign capital, attract more foreign investment and make more overseas investment, expand investment scope, give equal emphasis to the introduction of foreign capital and intelligence, and constantly improve the quality and efficiency of the utilization of foreign capital, so as to make new contributions to sound and rapid economic and social development of the province. In 2016, the actual utilization of foreign capital is expected to increase by 10% over the previous year, and foreign direct investment is expected to grow by 6% year-on-year. 1 )  C O N T I N U E T O M A K E G O O D U S E O F F O R E I G N P R E F E R E N T I A L L O A N S

First, the province will actively plan and organize foreign loan application in 2016. Given that loans of international financial organizations focus mainly on the policy orientation and priority areas listed in the State Council’s document No. 28 about support for the revitalization of Northeast China, Jilin will mainly submit project proposals for the redevelopment of old industrial bases,

260  Development overview the transformation of resource-exhausted cities, major water conservancy and transportation infrastructure projects and livelihood improvement projects in shantytowns. It plans to secure about US$100 million of loans. In order to make good use of foreign government loans, it is necessary to accurately grasp the country’s policy trend that turns from aid to cooperation. Therefore, Jilin will carefully plan candidate projects of about US$80 million in value in the fields of social development, environmental protection, energy conservation and emission reduction, and submit applications and reports in a timely manner. Second, the province will actively promote the proposed projects by carefully carrying out related preliminary work. It will continue to organize the preparation of feasibility study reports and fund applications for the following projects that have already been included in the national list of candidate projects: the water recycling project of Changchun Water (Group) Co., Ltd. with loans from Germany, the teaching equipment import project of Dongfeng Vocational Education Center with Israeli loans, the medical equipment import project of six hospitals in Changchun with Israeli loans, and the medical equipment import project of three hospitals in Yanbian with Kuwaiti loans. Such prior work is expected to help move negotiations forward, get contracts signed sooner and have the projects launched earlier. Third, the province will actively promote progress in the 1,000 tons/year carbon fiber production line project of Jilin Tangu Carbon Fiber Co., Ltd., with US$45 million of loans from the Export-Import Bank of the United States, which is a key project in the Northeast China revitalization plan. The province will guide relevant entities to prepare the fund application, push for negotiations on the commercial contract for equipment purchase with the US side, and help the entities nail the commercial contract and the re-lending agreement. Assistance will also be provided for the inspection and acceptance of imported equipment and the confirmation of tax exemption, as well as other relevant tasks. 2 )  F U R T H E R S T R E N G T H E N F O R E I G N I N V E S T M E N T M A N A G E M E N T

The province will pay close attention to the compilation of the negative list of foreign investment in China. Meanwhile, it will provide better services and guidance for the implementation of the Administrative Measures for the Approval and Filing of Foreign Investment Projects in Jilin Province. 3 )  C O N T I N U E T O P R O M O T E O V E R S E A S I N V E S T M E N T

First, based on the outline of the 13th Five-Year Plan of China for overseas investment and Jilin’s 12th Five-Year Plan, the province will formulate the 13th Five-Year Plan for International Capacity Cooperation of Jilin Province in accordance with the requirements of the central government and the actual situation in Jilin, so as to provide better services and guidance for the implementation

Regional investment analysis report 2015  261 of the Administrative Measures for the Approval and Filing of Overseas Investment Projects of Jilin Province. Second, it will deliver better services in tracking overseas investment enterprises. It will collect overseas investment information and investment policies and regulations of relevant countries, provide follow-up guidance for capable Jilin enterprises to make overseas investment, and improve the quality and enlarge the scale of Jilin’s overseas investment enterprises. Third, the province will establish a database of key overseas investment projects and provide better services during and after the project construction. In order to effectively promote overseas investment by Jilin enterprises and facilitate the going-global of enterprises, the province will establish a database of key overseas investment projects, provide better follow-up and coordination services, and constantly improve the service level during and after the construction of overseas investment projects. 4 Heilongjiang (1)  Recent policies of Heilongjiang to promote inward and outward investment 1 )  L A U N C H O P E N I N G - U P P L A N S

In accordance with the BRI, Heilongjiang Province issued the “China–Mongolia– Russia Economic Corridor” Heilongjiang Land and Maritime Silk Road ­Economic Belt Development Plan as the guiding document of Heilongjiang’s development and opening-up, defining the direction and path of the province’s opening-up to the outside world. In order to implement the plan, the province launched the Implementation Plan for the Participation of Heilongjiang Province in the Construction of the Silk Road Economic Belt and the 21st Century Maritime Silk Road and the Key Points for the Development of the Heilongjiang Land and Maritime Silk Road Economic Belt in 2016. 2 )  I N T R O D U C E P O L I C I E S T O P R O M O T E O P E N I N G - U P

In order to promote the development the of Suifenhe–Dongning Pilot Development and Opening up Zone, the People’s Government of Heilongjiang Province issued the Implementation Opinions of the People’s Government of H ­ eilongjiang Province on the Implementation of Several Policies and Measures Supporting the Development and Opening up of Major Border Areas. There is also the Circular of the General Office of the People’s Government of ­Heilongjiang Province on Issuing the Implementation Plan of Heilongjiang Province to Promote International Production Capacity and Equipment Manufacturing Cooperation, which aims to guide the healthy and orderly development of international production capacity and equipment manufacturing cooperation of the province. The Circular of the General Office of the People’s Government of ­Heilongjiang Province on Promoting Replicable Pilot Reform Experience of China (Shanghai) Pilot Free

262  Development overview Trade Zone intends to help promote international investment facilitation, establish an efficient and convenient management system and supervision model, and encourage innovations in the opening-up and development mechanisms for border areas. The Implementation Opinions of the General Office of the People’s Government of Heilongjiang Province on Promoting the Transformation, Upgrading, and Innovation-Driven Development of All Development Zones in Heilongjiang Province aims to renew the approach to the utilization of foreign capital, change the way of attracting investment, and give full play to the role of development zones as leaders in attracting foreign investment. 3 )  F U R T H E R S T R E A M L I N E A D M I N I S T R A T I O N A N D D E L E G A T E P O W E R TO IMPROVE THE LEVEL OF FOREIGN PROJECT MANAGEMENT

After the 18th National Congress of the CPC, Heilongjiang Province revised the Catalogue of Investment Projects Approved by the Government for two times to delegate more power regarding foreign investment project management to lowerlevel authorities. All foreign investment projects were to be approved by the relevant authorities at the local level rather than the provincial level except for those in restricted categories for which such delegation of power was explicitly prohibited in relevant national regulations and those submitted by enterprises directly affiliated to a provincial authority. This further simplified the procedures for filing foreign investment projects. In addition, the province applied the same requirements and filing procedures for domestic and foreign investment projects, based on the Circular of the General Office of the People’s Government of Heilongjiang Province on Further Simplifying the Filing Procedures for Investment Projects of Enterprises. Project filing was thus made even easier and efficient. The province strictly followed the requirements of the Circular of the National Development and Reform Commission on the Implementation of the Administrative Measures for Approval and Registration of Overseas Investment Projects to launch online filing of overseas investment projects and improve work efficiency. (2)  Inward and outward investment of Heilongjiang in 2015 1 )  U T I L I Z A T I O N O F F O R E I G N C A P I T A L

i)  Foreign direct investment. In 2015, Heilongjiang welcomed 80 new foreigninvested enterprises, down 18.37% year-on-year; the province actually used US$5.449 billion of foreign investment, up 7.09% year-on-year. Enterprises from 23 countries and regions invested in Heilongjiang Province, specifically, US$2.799 billion came from the Hong Kong SAR, down 27.77% year-on-year; US$478 million from the United Kingdom, up 3.8 times over the previous year; US$179 million from the United States, up 167.73% year-on-year; US$161 million from the Cayman Islands, up 6.9 times; and US$133 million from British Virgin Islands, a 7.829% year-on-year growth. The industrial d­ istribution of the investment is as follows: The primary industry actually used US$96.63 million of

Regional investment analysis report 2015  263 foreign capital, down 12.94% year-on-year; the secondary industry actual used US$3.611 billion, a 27.89% increase over the previous year; and the actual utilization of foreign capital by the tertiary industry was US$1.741 billion, a 19.14% decrease. The actual utilization of foreign capital in the 10 major industries of Heilongjiang amounted to US$4.806 billion, a 4.32% year-on-year increase. ii)  Foreign loans. The Asian Development Bank (ADB) added US$60 million of loans for the transformation and development of coal-exhausted cities in Heilongjiang Province, making a total of US$310 million, the largest loan so far in Heilongjiang from international financial organizations. The project also received a grant of US$1.1 million from the ADB for technical assistance, and preparations of the implementation are under way. Preliminary work commenced for the eco-friendly irrigation and drainage system of a modern ­agriculture project supported by a loan of US$150 million from the ADB. In addition, the following projects were also launched smoothly: ADB-funded US$150 million central heating project, the smart transportation project in northern high and cold cities with US$200 million of loans from the World Bank, and the energy-efficient reconstruction project in Harbin with EUR50 million of loans from the European Investment Bank. Applications were approved by the state for the following two projects: the vocational education project in Harbin of EUR24 million of promotional loans from Germany, and the Qitaihe Technician College’s new campus construction and equipment purchase project funded by promotional loans from Germany. 2 )  O V E R S E A S I N V E S T M E N T A C T I V I T I E S

i)  Overseas investment. In 2015, a total of 127 Heilongjiang enterprises set up 163 facilities in 23 countries and regions, an increase of 83.1% from the previous year, with the total contractual investment coming to US$6.901 billion, 4.1 times that of the previous year. Up to 92 Heilongjiang enterprises made actual overseas investment totaling US$292 million, a decrease of 49.1% year-on-year. By the end of 2015, the province’s accumulated foreign investment was US$4.312 billion, of which US$2.572 billion was in Russia and US$1.74 billion in other countries. In terms of investment destinations, 38 domestic enterprises made actual investment in Russia, a decrease of 7.32% year-on-year, and the total actual investment reached US$146 million, a 0.69% year-on-year increase. Another 54 Heilongjiang enterprises invested in 25 countries and regions other than Russia, down 1.81% over the previous year, and the actual investment was US$146 million, down 51.97% year-on-year. The actual investment in Russia remained stable, while that in other countries and regions dropped dramatically as Bright Oceans Corporation’s investment project in the Hong Kong SAR and Xuanyuan Group’s investment in Belarus were about to complete and loan suspended for the Phase II project in Guyana of Baishanlin International Forest Development Inc. Yet with a much larger number of companies filed for overseas investment in 2015, the actual outward investment is expected to pick up in 2016.

264  Development overview Regarding the nature of the investment entities, 80 out of 92 investors, or 86.96%, are private enterprises, and their actual investment was US$267 million, accounting for 91.44% of the total. The remaining 12 are state-owned enterprises, 13.04% of the total, with an actual investment of US$25 million, accounting for 8.56%. Major projects delivered by private enterprises include the following: Menglan Xinghe Energy Co., Ltd. invested US$42.47 million in Russia, ­Xuanyuan Group invested US$27.95 million in Belarus, Heilongjiang Zijin Longxing Mining Co., Ltd. invested US$1.54 million in Russia. ii)  Overseas project contracting. In 2015, the total value of new contracts signed for overseas projects by Heilongjiang enterprises was US$2.346 billion, an increase of 3.18 times over the previous year, ranking fifteenth in China; the turnover was US$2.516 billion, a 1.8 times year-on-year increase, ranking fourteenth in the country. By the end of 2015, the contract value of overseas projects amounted to US$10.08 billion and the turnover totaled US$9.19 billion. The new overseas contracts signed for projects in Russia had a total value of US$16 million, accounting for 0.68% of the province’s total, a 0.06% year-on-year increase. The total turnover was US$235 million, accounting for 9.34% of the province’s total, a year-on-year increase of 48.5%. The value of new contracts signed by Heilongjiang enterprises for projects in other countries and regions amounted to US$2.33 billion, accounting for 99.2% of the province’s total, up by 3.16 times from the previous year, with a total turnover of US$2.281 billion, accounting for 90.66% of the total of the province, up 2.08 times. Most of these projects are in Asia, with a total value of US$2.19 billion, or 93.4% of the total; and the turnover reached US$1.83 billion, accounting for 72.7% of the total. 3 )  P R O B L E M S

i) More needs to be done to bring in high-quality talents and technologies. Generally, although foreign investment continued to grow significantly, there were few large high-tech projects to lead industrial clusters. Foreign investment projects are mainly concentrated in labor-intensive industries such as middle and low-end processing and manufacturing (assembly, food processing, primary processing of light industrial products, etc.). On the whole, the introduction of capital, intelligence and technologies was not well integrated. ii)  Few sources of foreign investment involving few transnational corporations. Foreign investment mainly came from the Hong Kong, the British Virgin Islands and the Cayman Islands. The investment entities were mainly companies registered abroad by domestic owners for special purposes. Few enterprises were foreign high-tech companies or among the Fortune Global 500. This lead to a failure in truly bringing in capital, intelligence and advanced technologies. iii) Overconcentration of outward investment and weak competitiveness of outward investors. Heilongjiang’s overseas investment was made by private

Regional investment analysis report 2015  265 companies, mostly small ones. They were short of capital, had a weak ability to develop and compete in the international market, and were in great need of professionals in the areas of law, taxation, finance and accounting, as well as technicians. Some of the investors pursued quick profits without long-term plans. Some can even be reckless in making the investment in the first place, give little thought to corporate social responsibilities, and fail to integrate into the local society. Thus, they may breach local policies and laws from time to time. Moreover, Heilongjiang enterprises mainly invested in the Russian Far East in low-end businesses such as light industrial product processing, logging, wood processing, crop cultivation, food processing, etc., delivering products of low added value. 4 )  D E V E L O P M E N T T R E N D S A N D P R O S P E C T S F O R 2 016

At present, the inward and outward investment of Heilongjiang Province sees both challenges and opportunities. Internationally, a new round of global technological and industrial revolution gave rise to the new normal of industrial structure, and developed countries seized commanding heights and reestablished their leading edges in high-end manufacturing. Emerging economies actively promoted industrialization, vigorously introduced advanced technologies and equipment, in a bid to move up along the global value chain. There is a new trend in transnational investment and industrial transfer, and new international investment and trade patterns are taking shape. At home, the economy entered the new normal featured by mid- to high-level growth, and the reform on the supply side has been continuously advanced. The effort to cut excess production capacity has been intensified, and a new round of industrial structural adjustment has been rolled out on all fronts. There is no doubt that depending on the cost of factors to attract foreign capital, like what we have been doing earlier, will not continue to work in the new era. The BRI, a grand proposal made by China, has created historical opportunities for inward and outward investment today. Enterprises are now strongly encouraged to go global and carry out international production capacity and equipment manufacturing cooperation. The implementation of the “China–Mongolia–Russia Economic Corridor” Heilongjiang Land and Maritime Silk Road Economic Belt Development Plan and the improved infrastructure and supporting services will help the international logistics industry represented by cross-border transport over the Eurasian Continental Bridge and cross-border e-commerce represented by e-commerce trade with Russia flourish in Heilongjiang. Important opportunities for inward and outward investment and cooperation in related fields have been created for Heilongjiang, which enjoys the advantages of a latecomer. These advantages include: The province is the largest grain producer in China, enjoys great ecological conditions, has great potential for resource development and deep processing; has accumulated rich experience in cooperation with Russia; and boasts vast room for the transformation of high-tech research achievements and market-oriented reform. In accordance with the development orientation assigned by the state, ­Heilongjiang Province will focus on advancing policy coordination, facilities

266  Development overview connectivity, unimpeded trade, financial integration and people-to-people bonds and take Harbin as the center to form the Heilongjiang Corridor connecting Asia and Europe, which contains the Dalian–Harbin–Jiamusi–Tongjiang railway, Suifenhe–Manzhouli railway, Harbin–Heihe railway, and the border railway, which are to be connected with Russia’s railway lines in Siberia. The province will attract production factories to gather along the corridor, develop domestic and overseas industrial parks oriented to Russia, create cross-border industry chains, build up a strong export-oriented industrial system, strive to form a new growth pole of the regional economy, and create an important platform for expanding China’s cooperation with Russia, Europe and Northeast Asia. Heilongjiang will build itself into an important window for China to open to the north, providing important support and making important contributions to the implementation of the BRI. To this end, Heilongjiang Province will put its focus along the corridor, further increase investment in commerce, tourism, finance and logistics, import resource-intensive processing facilities, and export processed products and high-tech research achievements to promote the improvement and upgrading of the structure of its utilization of foreign capital. At the same time, the province will step up cooperation in overseas infrastructure construction and energy and resource development projects, actively promote international capacity and equipment manufacturing cooperation, encourage processing and manufacturing enterprises to go global despite international trade barriers, and enhance the capacity for sustainable development. (3)  Investment in and from BRI countries in 2015 1 )  I N V E S T M E N T O F B R I C O U N T R I E S I N H E I L O N G J I A N G

In 2015, four BRI countries, i.e., Russia, Singapore, Pakistan and Syria, invested in 22 projects in Heilongjiang Province, mainly in manufacturing, wholesale, retail sales, and catering. 2 )  I N V E S T M E N T I N B R I C O U N T R I E S B Y H E I L O N G J I A N G E N T E R P R I S E S

In 2015, 96 enterprises in Heilongjiang Province set up, in 12 BRI countries, 110 overseas enterprises. The contractual outward investment was US$6.24 billion, up 5.74 times over the previous year, accounting for 90.42% of the total of the province. Up to 52 Heilongjiang enterprises made actual investment of US$196 million in BRI countries, down 21.29% year-on-year, accounting for 67.1% of the total overseas investment of the province. In addition to the large investment in Russia, investment in other BRI countries also showed rapid growth, while investment in non-BRI countries and regions, such as the United States and the Hong Kong SAR, fell sharply by 46.54% and 87.75% respectively. The province signed new contracts worth US$2.206 billion for projects in nine BRI countries, i.e., Pakistan, Mongolia, Iraq, Turkey, Indonesia, Kazakhstan, Turkmenistan, the Philippines and Russia, accounting for 94.0% of the total contractual overseas

Regional investment analysis report 2015  267 investment of the province. A total turnover of US$2.064 billion was achieved in 13 BRI countries, namely Turkey, Iraq, Russia, Indonesia, Mongolia, Pakistan, Saudi Arabia, Uzbekistan, Turkmenistan, Kazakhstan, Bangladesh, India and the Philippines, representing 82.0% of the total. 3 )  D E V E L O P M E N T T R E N D S A N D P R O S P E C T S F O R 2 016

Heilongjiang will pay more attention to the quality of foreign capital attraction and combine capital introduction with the introduction of technologies and intelligence. It will strengthen cooperation with major international enterprises with advanced technologies, efficient management and market development, and encourage and support the establishment of joint venture R&D, marketing, procurement and financial centers in Heilongjiang. The province will strive to maintain the scale of investment from BRI countries and regions such as the Hong Kong SAR and Singapore, and attract investment in agriculture, aviation and information technology from countries with advanced technologies such as Israel, Russia and Ukraine. In the light of the actual situation of the province, relevant authorities of the province will work to revise the Heilongjiang section of the Catalogue of Priority Industries for Foreign Investment in Central and Western China, and get more advantageous industries into the encouraged categories. The province will also guide and encourage local enterprises to go to Russia for cooperation in agriculture, food processing, light industrial production, logging, wood processing and mineral resources development, and vigorously advance the construction of overseas industrial parks in Russia, so as to grasp the opportunities brought by the development campaign of the Russian Far East. It will continue to promote international project contracting and labor export to Russia, strive for the export of technologies, capital and brands, and strengthen the position of Heilongjiang investors in Russia. It will continue to tap into the potential of Harbin Power Plant Equipment Corporation to carry out international project contracting in Southeast Asia and South Asia, and speed up the construction of contracted projects already commenced. The province will also support local enterprises to develop agricultural and mineral resources in Central Asia.

Note 1 The “ten ones”: one list for border control, one system to ensure clean government, one seal to give approval, one card for customs clearance, one phone number providing all services, one green card letting talents in, one department in charge of all m ­ arket-related affairs, one platform for credit management, one form for all inspections, and one team for law enforcement.

Part II

Basic data

3 Global direct investment

(I)  FDI flows by region and economy, 2010–2015

2013

2014

European Union Austria Belgium Bulgaria Croatia Cyprus Czech Republic Denmark Estonia Finland France Germany Greece Hungary Ireland Italy Latvia Lithuania Luxembourg Malta Netherlands Poland Portugal Romania Slovakia Slovenia Spain

358,646 2,575 60,635 1,525 1,133b 766 6,141 –9,163 1,024 7,359 13,889 65,642b 330 2,193 42,804 9,178 379 800 38,588c 929 –7,184 12,796 2,424 3,041 1,770 105 39,873

444,824 10,616 78,258 1,849 1,682b 2,384 2,318 11,463 974 2,550 31,642 67,515b 1,144 6,300 23,545 34,324 1,453 1,448 9,748c 15,510 24,369 18,258 7,428 2,363 3,491 1,087 28,379

364,868 3,989 9,308 1,467 1,451b 1,257 7,984 418 1,569 4,158 16,979 20,316b 1,740 14,375 45,207 93 1,109 700 79,645c 12,061 17,655 7,120 8,242 3,199 2,982 339 25,696

333,082 10,376 23,396 1,920 955b 3,497 3,639 –742 553 –5,165c 42,892 18,193b 2,818 3,097 37,033 25,004 903 469 23,248c 9,575 32,039 120c 2,234 3,602 591 –144 41,733c

209,845 4,675 –49,573 1,710 3,451b 679b 5,909 3,652 983 18,625c 15,191 1,831b 2,172 4,039 7,698 11,451b 474 217 7,087c 9,279 30,253 13,883c 8,807 3,234 479 1,564 22,904c

1,328,102 1,563,749 1,402,887 1,467,233 1,228,263 673,200 827,301 678,801 696,851 451,040 404,845 489,657 400,794 325,531 241,044

2012

Worlda Developed countries Europe

2011

2010

Region/economy

Inflow of FDI (US$ million)

Table 3.1  FDI flows by region and economy, 2010–2015

409,458 3,837 1,029 1,774 174 4,534 1,223 3,642 208 8,290b 42,883 31,719 –289 1,270 100,542 20,279 643 863 24,596 9,532b 72,649 7,489 6,031 3,389 803 993 9,243

1,762,155 932,904 473,569

2015

459,365 9,585 9,092 230 –91b 679 1,167 1,381 156 10,167 48,156 125,451b 1,557 1,172 22,348 32,655 19 –6 23,243c 1,921 68,358 6,147 –9,782 6 946 –18 37,844

1,366,070 963,210 565,948

2010

519,862 21,913 46,371 163 42b 2,201 –327 11,254 –1,488 5,011 51,415 77,930b 1,772 4,702 –1,165 53,629 61 55 10,737c 922 34,789 3,671 16,495 –28 713 198 41,164

1,587,448 1,156,137 586,793

2011

2013

2014

2015

316,724 13,109 33,985 347 –56b –281 1,790 7,355 1,030 7,543 31,639 66,089b 678 11,678 15,286 7,980 192 392 68,428c 2,574 5,235 –2,656 –9,157 –114 8 –259 –3,982

285,131 16,216 17,940 240 –180b 3,473 4,019 9,537 375 –7,519c 24,997 30,109b –785 1,868 23,975 30,759 411 192 34,555c 2,603 56,926 –3,299c –90 –281 –423 –223 25,829c

280,126 7,690 8,534 215 1,886b 2,176b –529 10,952 236 574c 42,869 112,227b 856 3,381 31,795 23,451b 137 –36 –4,307c 2,335 40,809 5,204c 6,664 –77 –123 –9 30,688c

487,150 12,399 38,547 86 13 9,718 2,305 13,214 306 –10,538b 35,069 94,313c 379 1,533 101,616 27,607 16 –10 39,371 –215b 113,429 2,901 8,167 310 –183 –65 34,586

1,283,675 1,305,910 1,354,046 1,474,242 872,860 833,627 822,829 1,065,193 376,400 316,816 315,924 576,254

2012

Outflow of FDI (US$ million)

166d 1,108 15,250 28,309

165d 246 17,044 28,744

226,449 28,400 198,049

41,906 36,443 231c 5,458 –1,252 1,026

579,891 44,072

15,746 2,300 6,386 1,909 1,574c — 2,064 1,513

North America Canada United States

Other developed countries Australia Bermuda Israel Japan New Zealand

Developing economies Africa

North Africa Algeria Egypt Libya Morocco South Sudan Sudan Tunisia

7,547 2,580 –483 — 2,568c — 1,734 1,148

639,135 47,705

68,163 57,050 –258c 9,095 –1,758 4,034

269,531 39,669 229,862

44,833

46,199

Other developed countries in Europe Gibraltar Iceland Norway Switzerland

12,923 41,803

2011

140 58,954

2010

Sweden United Kingdom

Region/economy

17,150 3,052 6,031 1,425 2,728c — 2,311 1,603

639,022 56,435

69,061 55,802 48c 8,055 1,732 3,424

208,946 39,266 169,680

168d 1,025 18,774 15,989

35,926

16,334 59,375

2012

Inflow of FDI (US$ million)

13,580 2,661 4,192 702 3,298c –78d 1,688 1,117

670,790 53,969

69,987 54,239 55c 11,804 2,304 1,585

301,333 70,565 230,768

166d 397 14,441 –22,555c

–7,551

3,571 47,675

2013

11,540 1,488d 4,783 50d 3,582c –700d 1,277 1,060

681,387 53,912

63,735 51,854 –32c 6,432 2,090 3,391

146,261 53,864 92,397

167d 436 8,682 21,914c

31,199

10,036 72,241

2014

12,648 –587 6,885 726b 3,162d –277b 1,737 1,002

764,670 54,079

30,798 22,264 204d 11,566 –2,250 –986

428,537 48,643 379,894

–412d –76 –4,239 68,838

64,111

12,579 39,533

2015

4,781 220 1,176 2,722 589c — — 74

340,876 9,264

84,760 19,804 –33c 8,010 56,263 716

312,502 34,723 277,779

— –2,357 23,239 85,701

106,583

20,349 46,633

2010

1,491 534 626 131 179c — — 21

357,570 6,500

120,627 1,669 –337c 9,166 107,599 2,530

448,717 52,148 396,569

— 23 18,763 48,145

66,931

29,861 107,801

2011

3,332 193 211 2,509 406c — — 13

357,249 12,386

131,175 5,583 241c 3,258 122,549 –456

365,285 53,938 311,347

— –3,206 19,561 43,321

59,676

28,952 28,939

2012

Outflow of FDI (US$ million)

952 117 301 180 332c — — 22

380,784 15,951

137,932 –3,063 50c 4,671 135,749 525

378,879 50,536 328,343

— 460 20,987 10,238c

31,685

28,879 –14,972

2013

1,676 — 253 940d 444c — — 39

468,148 13,073

117,342 –351 93c 3,975 113,629 –4

389,563 52,620 336,943

— –247 19,247 16,798c

35,798

12,156 –59,628

2014

continued

1,831 103 182 864b 649d — — 33

377,938 11,325

121,788 –16,739 –84d 9,743 128,654 214

367,151 67,182 299,969

— –599 19,426 70,277

89,104

23,717 –61,441

2015

7,663 3 652d 37 282d 2,180 1,687

1,975d

8,316 1 538d 62 313d 928 2,939

2,734d

Central Africa Burundi Cameroon Central African Republic Chad Republic of the Congo Democratic Republic of the Congo Equatorial Guinea

18,957 161 144 155 302 66 3,237 956d 25 785 556 589d 1,066 8,915 338 951d 711

12,052 177 35 159 339 20 2,527 101d 33 450 406 131d 940 6,099 266 238d 86

West Africa Benin Burkina Faso Cape Verde Cote d’Ivoire Gambia Ghana Guinea Guinea-Bissau Liberia Mali Mauritania Niger Nigeria Senegal Sierra Leone Togo

40,157

2011

28,327

2010

2,015d

9,529 1 526d 70 343d 2,152 3,312

16,321 230 329 70 330 93 3,293d 606d 7 985 398 1,389d 841 7,127 276 225d 122

39,284

2012

Inflow of FDI (US$ million)

Other African countries

Region/economy

Table 3.1 continued

1,914d

9,036 7 326d 2 538d 2,914 2,098

14,207 360 490 70 407 38 3,226d 135 20 1,061 308 1,126d 719 5,608 311 144d 184

40,388

2013

1,933d

12,056 32 501d 3 761d 5,502 2,063

12,264 377 342 78 462 28 3,357d 68b 21 302d 199 492d 769 4,694 343 440d 292

42,371

2014

316b

5,829 7 620b 3 600b 1,486b 1,674

9,893 229 167 95 430 11 3,192 85b 18 512b 153 495b 525 3,064 345 519b 53

41,432

2015

—

–34 — –36b — — 4b 7

1,304 –18 –4 0 25 — — — 6 369 7 17b –60 923 2 — 37

4,483

2010

—

–38 — –110b — — 53b 91

2,581 60 102 1 15 58 25 1 1 372 4 2b 9 824 47 — 1,060

5,009

2011

—

398 — –71b — — –31b 421

3,508 19 73 –3 14 10 1 2 — 1,354 16 1b 2 1,543 56 — 420

9,053

2012

Outflow of FDI (US$ million)

—

121 — –138b — — –2b 401

2,228 59 58 –5 –6 48 9d — — 698 3 13b 101 1,238 33 — –21

14,999

2013

—

214 — –106b — — 6b 344

2,246 31 59 –5 9 17 12d 1b 3 — 1 30b 89 1,614 27 — 358

11,401

2014

—

360 — –105b — — –9b 508

2,028 26 28 –3 8 19 221 1b — — 1 15b 52 1,435 27 — 198

9,493

2015

499d 251 51 4,520 8 37 91b 288b 178 808 430 211 112d 544 1,813

3,485 –3,227 218 30 97 1,018 793 3,636c 120 634 166

South Africa Angola Botswana Lesotho Malawi Mozambique Namibia South Africa Swaziland Zambia Zimbabwe

2010

Gabon Rwanda Sao Tome and Principe East Africa Comoros Djibouti Eritrea Ethiopia Kenya Madagascar Mauritius Seychelles Somalia Uganda Tanzania

Region/economy

8,759 –3,024 1,371 61 129 3,559 816 4,243c 107 1,110 387

696d 119 32 4,618 23 79 39b 627b 335 810 433 207 102d 894 1,229

2011

7,961 –6,898 487 57 129 5,629 1,133 4,559c 32 2,433 400

832d 255 23 4,878 10 110 41b 279b 259 812 589 260 107d 1,205 1,800

2012

Inflow of FDI (US$ million)

11,018 –7,120 398 50 120 6,175 801 8,300c 84 1,810 400

968d 258 11 6,455 9 286 44b 1,281b 505d 567 259 170 107d 1,096 2,131

2013

10,758 –3,881d 393 46 130 4,902 414 5,712c 13 2,484 545

973d 268 20 7,635 14d 153 47b 2,132b 989d 351 418 229 106d 1,147 2,049

2014

17,901 8,681 394 169 143b 3,711 1,078 1,772d –121b 1,653b 421

624b 471 28 7,808 5 124 49b 2,168b 1,437b 517 208 195 516b 1,057 1,532b

2015 –9 — — 174 — — — — 2 — 129 6 — 37 — 2,442 1,340 –1 — 42 2 –4 –76d 1 1,095 43

2010 –72 — — 162 — — — — 9 –1 158 8 — –12 — 1,926 2,093 10 — 50 3 –5 –257d –9 –2 43

2011 79 — — 259 — — — — 16 1 180 16 — 46 — 5,127 2,741 –8 — 50 3 12 2,988d –6 –702 49

2012

Outflow of FDI (US$ million)

12,668 6,044 –85 — –46 — 13 6,649d — 66 27

–155 14 1 110 — — — — 6b — 135 16 — –47 —

2013 –36 2 4 162 — — — — 28b — 91 16 — 27 — 9,717 2,131 –43 — –50 97 58 7,669d –4 –213b 72

2014

–37 — 3 279 — — — — 217b — 54 8 — — —

continued

6,825 1,892 –84 — –15b 2 –55 5,349d –3b –283b 22

2015

233,574 123,985 96,212c 120b

9,773d 726 4,715 –1,957d

203,578 114,734 72,319c 14b

9,497d 2,831 1,691 2,492d

110,573 481 1,342 13,771 279 9,060 6,669 1,298 55,076d 14,568 29 8,000

35,069 211

East Asia Chinese Mainland Hong Kong SAR Democratic People’s Republic of Korea Republic of Korea Macao SAR Mongolia Taiwan, China

Southeast Asia Brunei Darussalam Cambodia Indonesia Laos Malaysia Myanmar Philippines Singapore Thailand Timor-Leste Vietnam

South Asia Afghanistan

44,352 83

95,939 691 1,372 19,241 301 12,198 1,118 1,852 48,329d 3,271 47 7,519

327,413

306,975

East Asia and Southeast Asia

425,308

2011

401,851

2010

32,414 94

115,975 865 1,835 19,138 294 9,239 497 2,033 57,150d 16,517 39 8,368

9,496d 3,894 4,452 3,207d

213,191 121,080 70,841c 221b

320,563

400,840

2012

Inflow of FDI (US$ million)

Asia

Region/economy

Table 3.1 continued

35,629 69

129,997 776 1,872 18,817 427 12,115 584 3,737c 66,067d 16,652 50 8,900

12,767d 4,527 2,140 3,598d

221,578 123,911 74,546c 89b

347,537

427,879

2013

41,446 54b

124,827 568 1,730 22,580 721d 10,799 946 6,201c 68,496d 3,537 49 9,200

9,274d 3,294 508 2,839d

258,533 128,500 114,055c 63b

381,047

465,285

2014

50,484 58b

125,731 173 1,701 15,508 1,220b 11,121 2,824 5,234 65,262d 10,845 43 11,800

5,042d 3,907b 195 2,415d

322,144 135,610 174,892c 83b

447,876

540,722

2015

16,294 72

61,110 –84 21 2,664 –1b 13,399 — 616 35,407d 8,162 26 900

28,280d –441 62 11,574d

134,311 68,811 88,025c —

250,008

284,078

2010

12,860 70

62,035 71 29 7,713 — 15,249 — 339 31,459d 6,258 –33 950

29,705d 120 94 12,766d

213,309 74,654 95,972c —

268,534

313,648

2011

8,901 65

54,727 283 36 5,422 — 17,143 — 1,692 18,341d 10,597 13 1,200

30,362d 469 44 13,137d

215,888 87,804 84,072c —

266,214

299,424

2012

Outflow of FDI (US$ million)

2,156 —

78,802 859 46 6,647 1b 14,107 — 3,647 39,592d 11,934 13 1,956

28,360d 1,673 41 14,285d

233,228 107,844 81,025c —

292,427

335,318

2013

12,104 —

75,348 382 43 7,077 2b 16,369 — 6,754 39,131d 4,409 13 1,150

28,039d 681 106 12,711d

289,766 123,120 125,109c —

382,581

431,591

2014

7,762 —

66,681 508 47 6,250 1b 9,899 — 5,602 35,485d 7,776 13 1,100

27,640d 942b 12 14,773d

226,073 127,560 55,146c —

292,752

331,825

2015

913 76 27,417 3,649 216 87 2,022 478

63,187 156 1,396 1,689 1,305 3,748 1,243d 4,670 29,233 206 1,469 9,086 8,797 189

167,118

131,387 11,333 643 83,749

West Asia Bahrain Iraq Jordan Kuwait Lebanon Oman Qatar Saudi Arabia Palestine Syria Turkey United Arab Emirates Yemen

Latin America and the Caribbean

South America Argentina Bolivia Brazil

2010

Bangladesh Bhutan India Iran Maldives Nepal Pakistan Sri Lanka

Region/economy

156,500 10,840 859 96,152

193,315

52,831 98 1,882 1,486 3,259 3,177 1,753d 939 16,308 349 804 16,142 7,152 –518

1,136 29 36,190 4,277 424 95 1,162 956

2011

151,563 15,324 1,060 76,098

190,509

47,557 1,545 3,400 1,513 2,873 3,159 850d 396 12,182 58 — 13,284 8,828 –531

1,293 49 24,196 4,662 228 92 859 941

2012

Inflow of FDI (US$ million)

114,930 9,822 1,750 53,060

176,002

45,518 3,729 5,131 1,805 1,434 2,701 876d –840 8,865 176 — 12,284 9,491 –134

1,599 14 28,199 3,050 361 71 1,333 933

2013

128,285 5,065 648 73,086

170,285

43,270 1,519 4,782 2,009 953 2,906 739d 1,040 8,012 160 — 12,134 10,823 –1,787b

1,551 32 34,582 2,105 333 30 1,865 894

2014

120,930 11,655 503 64,648

167,582

43,362 –1,463 3,469 1,275 293 2,341 822d 1,071 8,141 120 — 16,508 10,976 –1,191b

2,235 12 44,208 2,050b 324 51 865 681

2015

41,970 965 –29 22,060

57,251

17,771 334 125 28 5,890 487 1,498d 1,863 3,907 84 — 1,469 2,015 71b

15 — 15,947 170b — — 47 43

2010

34,310 1,488 — 11,062

48,264

30,407 –920 366 31 10,773 958 1,222d 10,109 3,430 –128 — 2,330 2,178 58b

13 — 12,456 226b — — 35 60

2011

1,260 1,055 — –5,301

41,501

22,568 516 490 5 6,741 1,012 884d 1,840 4,402 29 — 4,105 2,536 8b

43 — 8,486 161b — — 82 64

2012

Outflow of FDI (US$ million)

16,709 890 — –1,180

32,293

44,665 532 227 16 16,648 1,965 10d 8,021 4,943 –48 — 3,527 8,828 5b

34 — 1,679 166b — — 212 65

2013

21,057 1,921 — 2,230

31,435

21,107 –394 242 83 –10,468 1,213 1,670d 6,748 5,396 188 — 6,658 9,019 12b

44 — 11,783 89b — — 121 67

2014

continued

23,036 1,139 — 3,072

32,992

31,310 497 153 1 5,407 619 855d 4,023 5,520 185 — 4,778 9,264 8b

46 — 7,501 139b — — 23 53

2015

16,583 6,430 165 198 216 8,455 –248 2,289 1,574

32,752 97d 1,466 –230 806 969 26,431 490 2,723

68,672 11 101 237 1,148 446 51,226b 11,948b 89 43

Central America Belize Costa Rica El Salvador Guatemala Honduras Mexico Nicaragua Panama

Caribbean Region Anguilla Antigua and Barbuda Aruba Bahamas Barbados British Virgin Islands Cayman Islands Curacao Dominica

2010

83,939 39 68 489 1,533 362 57,576b 19,026b 69 35

32,270 95d 2,178 219 1,026 1,014 23,649 936 3,153

16,674 14,648 644 247 557 7,665 70 2,504 5,740

2011

90,492 44 138 –316 1,073 313 74,502b 8,104b 57 59

29,649 189d 2,258 482 1,245 1,059 20,437 768 3,211

24,977 15,039 567 294 738 11,918 174 2,536 5,973

2012

Inflow of FDI (US$ million)

Chile Colombia Ecuador Guyana Paraguay Peru Suriname Uruguay Venezuela

Region/economy

Table 3.1 continued

137,078 42 101 226 1,111 –35 112,128b 18,176b 18 25

56,334 95d 3,091 179 1,295 1,060 45,855 816 3,943

17,878 16,209 727 214 72 9,298 188 3,032 2,680

2013

82,185 79 155 247 1,596 486 49,986b 23,731b 69 35

36,574 153d 2,746 311 1,396 1,144 25,675 840 4,309

21,231 16,325 773 255 346 7,885 163 2,188 320

2014

76,768 85 154 –23 385 254 51,606b 18,987b 175b 36

41,915 65d 2,850 429 1,208 1,204 30,285 835 5,039

20,176 12,108 1,060 122 283 6,861 276 1,647 1,591

2015

63,114 — 5 6 150 343 53,356b 9,400b 15 1

15,427 1d 25 –5 24 –1 15,050 16 317

10,534 5,483 131b — 128d 266 — –60 2,492

2010

68,860 — 3 3 524 389 59,934b 6,971b –30 —

12,898 1d 58 — 17 2 12,636 8 176

13,617 8,420 59b — –109d 147 3 –7 –370

2011

59,296 — 4 3 132 –129 54,110b 3,222b 12 —

22,963 1d 455 –2 39 208 22,470 66 –274

13,040 –606 41b — 8d 78 –1 –3 4,294

2012

Outflow of FDI (US$ million)

116,294 — 6 4 277 108 103,290b 11,029b –16 2

13,999 1d 308 3 34 68 13,138 116 331

8,388 7,652 63b — 2d 137 — 5 752

2013

91,821 — 6 9 397 –22 81,192b 8,738b 44 2

8,928 2d 83 — 106 24 8,304 80 329

11,803 3,899 77b — –32d 96 — 39 1,024

2014

80,725 — 6 10 158 86 71,169b 8,273b 35b 2

8,976 — 141 — 93 91 8,072 51 528

15,513 4,218 60b — –7d 127 — 33 –1,119

2015

Oceania Cook Islands Fiji French Polynesia Kiribati Marshall Islands Micronesia New Caledonia Palau Papua New Guinea Samoa Solomon Islands Tonga Tuvalu Vanuatu

Dominican Republic Grenada Haiti Jamaica Montserrat Federation of Saint Kitts and Nevis Saint Lucia Saint Vincent and the Grenadines St. Martin Trinidad and Tobago

Region/economy

–48 1,831

33 549

2,347 — 402 131 1d 150b 1b 1,715 8 –310 15 120 44b — 70d

100 86

127 97

2,220 — 350 64 –7d 89b 1b 1,439 3 29 — 166 25b 1b 60d

2,277 45 119 218d 2 112

2011

2,024 64 178 228d 4 119

2010

3,551 1b 376 155 –3d –18b 1b 2,831 22 25 26 24 31b 2b 78d

14 2,453

78 115

3,142 34 156 413d 3 110

2012

Inflow of FDI (US$ million)

2,831 3b 264 99 1d 156b 1b 2,171 18 18 14 53 51b 1b –19d

34 1,994

95 160

1,991 114 160 595d 4 139

2013

1,973 — 343 45 8d –299b 1b 1,782 40 –30 23 21 56b 1b –18d

47 2,489

93 110

2,208 38 99 591d 6 120

2014

2,229 1b 332b 83b 2d –54b 1b 1,879b –9b –28 16 21 13b 1b –29d

11b 1,619b

95 121

2,222 61 104 794d 4 78

2015

620 540b 6 38 — –46b — 76 — — — 2 3b — 1d

3 —

5 —

–204 3 — 58d — 3

2010

4 —

–79 3 — 75d — 2

935 814b 1 27 1d 29b — 40 — 1 1 4 16b — 1d

1 1,060

2011

4 —

274 3 — –18d — 2

1,603 1,307b 2 43 — 31b — 109 — 89 11 3 7b — 1d

–4 1,681

2012

Outflow of FDI (US$ million)

2,186 2,033b 4 65 — 13b — 61 — — — 3 7b — —

4 2,061

3 —

–391 1 — –86d — 2

2013

3 —

177 1 — –2d — 2

1,413 1,304b 38 30 8d –46b — 62 — — 4 1 11b — 1d

–1 1,275

2014

–1b 955b

3 —

22 1 — 4d — 2

continued

1,795 1,548b –44b 39b 2b –1b — 64b — 174 2 5 5b — 1d

2015

63,601

4,126 1,061 406 760 1,686 213

59,001 529 563 1,393 11,551 438 208 31,668 74 3,632b 6,495 1,636 814

  23,763

Southeast Europe Albania Bosnia and Herzegovina Montenegro Serbia Macedonia

CIS Armenia Azerbaijan Belarus Kazakhstan Kyrgyzstan Moldova Russian Federation Tajikistan Turkmenistan Ukraine Uzbekistan Georgia

Remarks Least developed countries (LDCs)e

2010

21,917

71,384 653 1,465 4,002 13,973 694 288 36,868 160 3,391b 7,207 1,635 1,048

7,341 876 496 558 4,932 479

79,275

2011

23,408

61,181 497 2,005 1,429 13,337 293 195 30,188 232 3,130b 8,401 563 911

3,312 855 395 620 1,299 143

64,786

2012

Inflow of FDI (US$ million)

Economies in transition

Region/economy

Table 3.1 continued

21,366

79,743 380 2,632 2,230 10,321 626 243 53,397 105 3,732b 4,499 629 949

4,403 1,266 302 447 2,053 335

84,500

2013

26,311

51,888 404 4,430 1,828 8,406 248 201 29,152 263 4,170b 410 626 1,750

4,437 1,170 502 497 1,996 272

54,463

2014

35,107

30,157 181 4,048 1,584 4,021 404 229 9,825 227b 4,259b 2,961 1,068 1,350

4,472 1,003 249 699 2,347 174

34,988

2015

3,090

50,167 8 232 51 7,885 — 4 41,116 — — 736 — 135

271 6 46 29 185 5

50,484

2010

4,081

55,260 216 533 126 5,390 — 21 48,635 — — 192 — 147

383 30 18 17 318 —

55,622

2011

4,683

32,756 16 1,192 121 1,481 — 20 28,423 — — 1,206 — 297

417 23 62 27 331 –26

33,193

2012

Outflow of FDI (US$ million)

7,527

75,304 27 1,490 246 2,287 — 29 70,685 — — 420 — 120

458 40 42 17 329 30

75,784

2013

5,199

71,687 16 3,230 39 3,639 — 42 64,203 — — 111 — 407

441 33 15 27 356 10

72,164

2014

2,599

30,670 11 3,260 118 616 — 17 26,558 — — –51 — 141

402 38 21 12 346 –15

31,112

2015

36,343

6,213

4,742

2011

26,187

2010

6,625

34,968

2012

5,810

30,313

2013

7,056

29,674

2014

4,819

24,466

2015

2,247

6,411

2011

2,023

2,320

2012

2,587

3,998

2013

2014

1,793

6,895

1,436

3,613

2015

Notes a Includes financial centers in the Caribbean (Anguilla, Antigua and Barbuda, Aruba, Bahamas, Barbados, British Virgin Islands, Cayman Islands, the Islands of Curacao, Dominica, Grenada, Montserrat, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Saint Martin, and Turks and Caicos Islands). b Capital transactions for direct investment are calculated as assets/liabilities. c Calculation on the basis of assets/liabilities. d Estimated. e Least developed countries include Afghanistan, Angola, Bangladesh, Benin, Bhutan, Burkina Faso, Burundi, Cambodia, Central African Republic, Chad, Comoros, Democratic Republic of the Congo, Djibouti, Equatorial Guinea, Eritrea, Ethiopia, Gambia, Guinea, Guinea-Bissau, Haiti, Kiribati, Laos, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Myanmar, Nepal, Niger, Rwanda, Samoa, Sao Tome and Principe, Senegal, Sierra Leone, Solomon Islands, Somalia, South Sudan, Sudan, Timor-Leste, Togo, Tuvalu, Uganda, Tanzania, Vanuatu, Yemen and Zambia. f Landlocked developing countries include Afghanistan, Armenia, Azerbaijan, Bhutan, Bolivia, Botswana, Burkina Faso, Burundi, Central African Republic, Chad, Ethiopia, Kazakhstan, Kyrgyzstan, Laos, Lesotho, Macedonia, Malawi, Mali, Moldova, Mongolia, Nepal, Niger, Paraguay, Rwanda, South Sudan, Swaziland, Tajikistan, Turkmenistan, Uganda, Uzbekistan, Zambia and Zimbabwe. g Small island developing states include Antigua and Barbuda, Bahamas, Barbados, Cape Verde, Comoros, Dominica, Fiji, Grenada, Jamaica, Kiribati, Maldives, Marshall Islands, Mauritius, Micronesia, Nauru, Palau, Papua New Guinea, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Samoa, Sao Tome and Principe, Seychelles, Solomon Islands, Timor-Leste, Tonga, Trinidad and Tobago, Tuvalu and Vanuatu.

695

9,529

2010

Outflow of FDI (US$ million)

Source: World Investment Report 2016 of the United Nations Conference on Trade and Development.

Landlocked developing countries (LLDCs)f Small island developing states (SIDs)g

Region/economy

Inflow of FDI (US$ million)

282  Basic data

(II)  FDI stocks by region and economy in 2000, 2010 and 2015 Table 3.2  FDI stocks by region and economy in 2000, 2010 and 2015 Region/economy

Inflow of FDI (US$ million)

Outflow of FDI (US$ million)

2000

2015

2000

2010

2010

2015

Worlda Developed countries Europe

7,553,015 20,526,068 5,791,254 13,398,847 2,466,199 8,171,968

25,857,469 16,007,334 8,782,483

7,528,263 21,239,287 25,982,272 6,682,413 17,424,490 19,386,808 3,157,136 10,249,006 10,595,251

European Union Austria Belgium Belgium and Luxembourg Bulgaria Croatia Cyprus Czech Republic Denmark Estonia Finland France Germany Greece Hungary Ireland Italy Latvia Lithuania Luxembourg Malta Netherlands Poland Portugal Romania Slovakia Slovenia Spain Sweden United Kingdom

2,345,799 31,165 — 195,219 2,704 2,664 2,846 21,644 73,574 2,645 24,273 184,215 470,938 14,113 22,870 127,089 122,533 1,691 2,334 — 2,263 243,733 33,477 34,224 6,953 6,970 2,389 156,348 93,791 463,134

7,357,766 160,615 873,315 — 47,231 31,510 212,576 128,504 96,984 15,551 86,698 630,710 955,881 35,026 90,845 285,575 328,058 10,935 13,271 172,257 129,770 588,078 187,602 114,994 68,093 50,328 10,667 628,341 347,163 1,057,188

7,772,956 164,784 468,710 — 42,106 26,375 138,263 113,057 100,858b 18,914 92,340b 772,030b 1,121,288b 17,688 92,132 435,490 335,335 14,549 14,440 205,029b 163,522b 707,043 213,071b 114,220 69,112 48,163 11,847 533,306 281,876 1,457,408

2,890,286 24,821 — 179,773 67 760 557 738 73,100 259 52,109 365,871 483,946 6,094 1,280 27,925 169,957 19 29 — 193 305,461 268 19,417 136 555 772 129,194 123,618 923,367

9,007,232 181,639 950,885 — 2,583 4,472 197,433 14,923 165,375 5,545 137,663 1,172,994 1,364,565 42,623 22,314 340,114 491,208 895 2,086 187,027 60,596 968,142 16,407 62,286 1,511 3,457 8,147 653,236 374,399 1,574,707

9,341,790 208,263 458,794 — 3,083 5,448 133,134 18,481 190,608b 6,063 94,852b 1,314,158b 1,812,469b 26,487 38,503 739,418 466,594 1,230 2,235 169,570b 67,930b 1,074,289 27,838b 63,565 589 2,562 5,473 472,116 345,907 1,538,133

Other developed countries in Europe Gibraltar Iceland Norway Switzerland

120,400

814,200

1,009,528

266,850

1,241,775

1,307,459

2,834b 497 30,265 86,804

14,247b 11,784 177,318 610,851

20,153b 7,273 149,150 832,952b

— 663 34,026 232,161

— 11,466 188,996 1,041,313

— 7,153 162,124 1,138,182b

3,108,255 325,020 2,783,235

4,361,182 938,889 3,422,293

6,344,007 756,038 5,587,969

3,136,637 442,623 2,694,014

5,808,053 998,466 4,809,587

7,061,120 1,078,333 5,982,787

216,800 121,686

865,699 527,064

880,844 537,351

388,640 92,508

1,367,430 449,740

1,730,437 396,431

North America Canada United States Other developed countries Australia

Global direct investment  283 Region/economy

Bermuda Israel Japan New Zealand

Inflow of FDI (US$ million)

Outflow of FDI (US$ million)

2000

2000

2010

2015

2010

2015

265b 20,426 50,322 24,101

2,837c 61,180 214,880 59,738

2,432c 104,307 170,698 66,056

108b 9,091 278,442 8,491

925c 68,972 831,076 16,717

843c 89,347 1,226,554 17,262

1,708,780

6,424,574

9,252,291

826,238

3,444,443

6,287,916

153,710

594,611

740,432

38,911

133,034

249,389

45,328 3,379b 19,955 471b 8,842b 1,136 11,545

201,069 19,504b 73,095 16,334b 45,082c 15,690 31,364

244,279 26,232 94,266 17,762b 48,696c 24,412 32,911

3,198 205b 655 1,903b 402b — 33

25,777 1,513b 5,448 16,615b 1,914c — 287

34,608 1,822 7,731 20,203b 4,555c — 297

108,382

393,507

496,153

35,713

107,257

214,781

West Africa Benin Burkina Faso Cape Verde Cote d’Ivoire Gambia Ghana Guinea Guinea-Bissau Liberia Mali Mauritania Niger Nigeria Senegal Sierra Leone Togo

33,009 213 28 192b 2,483 216 1,554b 263b 38 3,247b 132 146b 45 23,786 1,295 284b 87

94,756 604 354 1,252 6,978 323 10,080 486 63 4,956 1,964 2,372b 2,251 60,327 1,699 482b 565

158,542 1,666 1,682 1,486 7,318 350b 26,397b 2,171b 134 7,056b 2,893 6,470b 5,161 89,735 2,808 1,848b 1,367

6,392 11 — — 9 —   12b — 2,188b 1 4b 1 4,144 22 — —

10,553 21 8 1 94 — 83 144 5 4,714 18 26b 9 5,041 263 — 126

19,514 168 283 — 116 — 351b 69b 7 4,345b 36 86b 223 11,694 375 — 1,761

Central Africa Burundi Cameroon Central African Republic Chad Republic of the Congo Democratic Republic of the Congo Equatorial Guinea Gabon Rwanda Sao Tome and Principe

5,963 47b 1,600b 104 576b 1,893b 617

40,196 6b 4,488b 511 3,595b 9,262b 9,368

78,799 70b 7,621b 626 4,901b 23,496b 19,982

723 2b 254b 43 70b 40b 34

1,696 1b 679b 43 70b 64b 229

3,034 1b 447b 43 70b 82b 1,992

1,060b

13,739b 6,805b 1,183 376b

b, d

55 11b

9,413b 2,871b 422 260b

280b — —

3b 573b 13 21

3b 352b 15b 29b

East Africa Comoros Djibouti Eritrea

7,202 21b 40 337b

34,687 60b 878 666b

63,967 107b 1,629 886b

386 — — —

1,480 — — —

2,398 — — —

Developing economies Africa North Africa Algeria Egypt Libya Morocco Sudan Tunisia Other African countries

b, d

continued

284  Basic data Table 3.2 continued Region/economy

Ethiopia Kenya Madagascar Mauritius Seychelles Somalia Uganda Tanzania

Inflow of FDI (US$ million)

Outflow of FDI (US$ million)

2000

2000

2010

2015

941b 932 141 683 515 4b 807 2,781

4,206b 2,282b 4,383 4,658 1,701 566b 5,575 9,712

10,692b 5,878b 6,795b 3,706b 2,762b 2,172b 10,887 18,453b

62,208 7,977 1,827 330 358 1,249 1,276 43,451c 536 3,966 1,238

223,868 16,063 3,351 3,625 1,150 4,606 5,334 179,565c 927 7,433 1,814

194,845 9,623 4,760 251 1,486b 28,768 3,707 124,940c 799b 16,544b 3,967

1,027,661

3,883,877

5,884,456

East Asia and Southeast Asia

927,584

3,016,309

East Asia Chinese Mainland Hong Kong SAR Democratic People’s Republic of Korea Republic of Korea Macao SAR Mongolia Taiwan, China

695,043 193,348 435,417e 55b

Southeast Asia Brunei Darussalam Cambodia Indonesia Laos Malaysia Myanmar Philippines Singapore Thailand Timor-Leste Vietnam

South Africa Angola Botswana Lesotho Malawi Mozambique Namibia South Africa Swaziland Zambia Zimbabwe Asia

South Asia Afghanistan Bangladesh Bhutan

2010 — 115b 9b 132b 130 — — —

2015 — 290b 13b 864 247 — 66 —

— 566b 14b 1,449b 288b — 81 —

93,528 6,209 1,007 — 90 3 51 83,249c 91 2,531 297

189,835 23,232 802 — 10b 10 207 162,841c 90b 2,134b 509

590,116

2,434,878

4,592,477

4,794,032

572,799

2,169,787

4,028,989

1,872,156 587,817b 1,067,228e 82b

3,089,140 1,220,903b 1,572,606e 664b

495,205 27,768b 379,285e —

1,568,720 3,115,641 317,211 1,010,202b 943,646e 1,485,663e — —

43,738c 2,801b 182 19,502c

135,500c 13,603 4,949 62,977c

174,573c 31,300b 16,753 72,341b

21,497c — — 66,655c

114,032c 550 2,901 190,380c

278,395c 4,877b 377 336,127b

232,541 3,868 1,580 — 588b 52,747 3,752b 13,762b 110,570c 30,944 — 14,730b

1,144,153 4,140 6,162 160,735 1,888b 101,620 14,507b 25,896 632,760c 139,286 155 57,004b

1,704,892 6,061 14,739 224,843 4,850b 117,644 20,476b 59,303c 978,411c 175,442 332 102,791b

77,594 484b 193 — 20b 15,878 — 1,032 56,755c 3,232 — —

601,067 543b 340 6,672 12b 96,964 — 6,710 466,129c 21,369 94 2,234b

913,348 2,645b 531 30,171 16b 136,892 — 41,100c 625,259c 68,058 86 8,590b

30,743 17b 2,162 4

269,421 1,392b 6,072 52

387,182 1,750b 12,912 215

2,764 — 68 —

100,385 — 98 —

143,989 — 188 —

28,212 ..d 517 — -d 1 45 27,328c 87 — 234

Global direct investment  285 Region/economy

Inflow of FDI (US$ million)

Outflow of FDI (US$ million)

2000

2000

2010

2015

2010

2015

India Iran Maldives Nepal Pakistan Sri Lanka

16,339 2,597 128b 72b 6,919 2,505

205,580 28,953 1,114b 239b 19,829 6,190

282,273 45,097b 2,784b 579b 31,600b 9,972

1,733 414b — — 489 60

96,901 1,673b — — 1,362 351

138,967 2,455b — — 1,719b 660

West Asia Bahrain Iraq Jordan Kuwait Lebanon Oman Qatar Saudi Arabia Palestine Syria Turkey United Arab Emirates Yemen

69,334 5,906 3,135 608 14,233 2,577b 1,912b 17,577 1,418b 1,244 18,812 1,069b 843

598,147 15,154 7,965 28,899 11,884 44,324 14,987b 30,564b 176,378 2,175b 9,939b 187,151 63,869 4,858b

703,242 27,660 26,630b 29,958 14,604 56,608 20,027b 33,169b 224,050 2,486 10,743b 145,471 111,139 697b

14,553 1,752 — 44 1,428 352 — 74b 5,285 — — 3,668 1,938b 12b

164,706 7,883 632 473 28,189 6,831 2,796b 12,545b 26,528 242 5 22,509 55,560 513b

419,499 14,625 2,109b 609 31,577 123,599 7,438b 43,287b 63,251 352 5 44,656 87,386b 605b

Latin America and the Caribbean

525,253

1,929,181

2,598,561

196,930

873,549

1,435,062

South America Argentina Bolivia Brazil Chile Colombia Ecuador Malvinas Islands Guyana Paraguay Peru Suriname Uruguay Venezuela

308,949 67,601 5,188 122,250 45,753 11,157 6,337 58b 756 1,219 11,062 — 2,088 35,480

1,080,751 87,552 6,890 640,334 154,624 82,977 11,857 75b 1,784 3,096 42,976 — 12,479 36,107

1,111,253 93,871b 11,710 485,998 207,827 149,692 15,627 75b 2,915 5,774 86,114 1,676 21,604 28,370

95,869 21,141 29 51,946 11,154 2,989 252b — 1 38b 505 — 138 7,676

278,193 30,328 8 149,337 51,161 23,717 561b — 2 244b 3,319 — 345 19,171

383,086 37,289b 52 181,447 87,415 47,300 861b — 2 106b 2,285 — 106 26,223

Central America Belize Costa Rica El Salvador Guatemala Honduras Mexico Nicaragua Panama

139,668 294c 2,709 1,973 3,420 1,392 121,691 1,414 6,775

425,494 1,461c 14,066 7,284 6,518 6,951 363,791 4,681 20,742

533,181 2,055c 27,172b 9,158 13,176 12,431 419,956b 8,919 40,314

8,598 42c 86 104 93 49 8,273 — —

126,243 49c 650 1 382 — 121,557 181 3,374

160,663 67c 2,094b 2 671 627 151,924b 494 4,784

76,636 231b 619b 1,161

422,936 968b 2,371b 4,567

954,127 1,257b 2,987b 3,952b

92,463 5b 5b 675

469,113 31b 92b 682

891,313 31b 118b 712b

Caribbean region Anguilla Antigua and Barbuda Aruba

d

continued

286  Basic data Table 3.2 continued Region/economy

Inflow of FDI (US$ million)

Outflow of FDI (US$ million)

2000

2000

2010

2015

2010

2015

Bahamas Barbados British Virgin Islands Cayman Islands Curacao Dominica Dominican Republic Grenada Haiti Jamaica Montserrat Netherlands Antilles Islands Saint Kitts and Nevis Saint Lucia Saint Vincent and the Grenadines St. Martin Trinidad and Tobago Oceania Cook Islands Fiji French Polynesia Kiribati Marshall Islands Nauru New Caledonia Niue Palau Papua New Guinea Samoa Solomon Islands Tonga Vanuatu Economies in transition

3,278b 308 30,313b 25,585b — 275b 1,673 348b 95 3,317c 83b 277f

13,438b 4,240 204,934b 136,703b 527 643b 18,906 1,273b 632 10,855 125b —

19,136b 6,667 610,731b 224,728b 951b 833b 30,978 1,565b 1,270 14,102 144b —

452b 41 69,818b 20,377b — 3b 68 2b 2b 709 — 6f

2,538b 3,623 376,160b 82,718b 32 33b 743 45b 2b 176 1b —

4,026b 4,020 750,855b 120,950b 137b 40b 751 52b 2b 319 1b —

487b 807b 499

1,598b 2,161b 1,315

2,156b 2,623b 1,906

3b 4b —

51b 53b 4b

62b 69b 6b

— 7,280b 2,156 66b 356 139b — 218

256 17,424b 16,905 77b 2,692 392b 5c 2,260b

331b 27,810b 28,842 82b 4,077b 905b 12b 2,195b

— 293b 281

b, d

6b 173 935 77 106 19b 61b 52,981

6,047b

16,425b

238 3,748 220 552 220b 454c 702,647

317b 3,318 73 522 415b 501c 597,844

39 — — ..c, d 22b 2b 10b — 194b — — 14b — 19,612

10 2,119b 2,982 2,029b 47 144b 2c 64 22b 321b 23b — 209b 13 27 58b 23c 370,354

11b 9,151b 10,988 9,035b 143b 349b 3b 90b 22b 658b 22b — 473b 14 50 106b 23c 307,548

Southeast Europe Albania Bosnia and Herzegovina Serbia Montenegro Macedonia CIS Armenia Azerbaijan Belarus Kazakhstan Kyrgyzstan Moldova Russian Federation Tajikistan Turkmenistan

2,254 247 450 1,017 — 540 50,727 513 1,791 1,306 10,078 432 449 29,738 136 949b

40,845 3,255 6,709 22,299 4,231 4,351 661,802 4,405 7,648 9,904 82,648 3,698 2,964 464,228 1,164 13,442b

49,293 4,826b 6,726b 28,825 4,344 4,572 548,551 4,269 22,183 17,972 119,833 3,887 3,539 258,402 2,112b 32,124b

16 — — — — 16 19,596 — 1 24 16 33 23 19,211 — —

2,794 154 195 1,960 375 110 367,560 122 5,790 205 16,212 2 68 336,355 — —

3,932 259b 294b 2,870 390 119 303,616 321 15,351 687 23,852 2 196 251,979 — —

b, d

b, d

b, d

b, d

b, d

c, d

Global direct investment  287 Region/economy

Ukraine Uzbekistan Georgia Remarks Least developed countries (LDCs)g Landlocked developing countries (LLDCs)h Small island developing states (SIDs)i

Inflow of FDI (US$ million)

Outflow of FDI (US$ million)

2000

2000

2010

2015

2010

2015

3,875 698b 762

57,985 5,366b 8,350

61,817 9,888b 12,525

170 — 118

7,958 — 848

9,572 — 1,656

  36,833

  151,273

  266,047

  2,668

  15,735

  36,491

35,793

179,375

309,942

1,127

29,700

44,689

20,685

74,890

102,750

2,032

10,426

20,626

Source: World Investment Report 2016 of the United Nations Conference on Trade and Development. Notes a Includes financial centers in the Caribbean (Anguilla, Antigua and Barbuda, Aruba, Bahamas, Barbados, British Virgin Islands, Cayman Islands, Curacao, Dominica, Grenada, Montserrat, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and Grenadines, San Martin and Turks and Caicos Islands). b Capital transactions for direct investment are calculated as assets/liabilities. c Negative stock value, included in regional and global sums. d Estimated. e Calculated on the basis of assets and liabilities. f The economy was dissolved on October 10, 2010. g Least developed countries include Afghanistan, Angola, Bangladesh, Benin, Bhutan, Burkina Faso, Burundi, Cambodia, Central African Republic, Chad, Comoros, Democratic Republic of the Congo, Djibouti, Equatorial Guinea, Eritrea, Ethiopia, Gambia, Guinea, Guinea-Bissau, Haiti, Kiribati, Laos, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Myanmar, Nepal, Niger, Rwanda, Samoa, Sao Tome and Principe, Senegal, Sierra Leone, Solomon Islands, Somalia, South Sudan, Sudan, Timor-Leste, Togo, Tuvalu, Uganda, Tanzania, Vanuatu, Yemen and Zambia. h Landlocked developing countries include Afghanistan, Armenia, Azerbaijan, Bhutan, Bolivia, Botswana, Burkina Faso, Burundi, Central African Republic, Chad, Ethiopia, Kazakhstan, ­ ­Kyrgyzstan, Laos, Lesotho, Macedonia, Malawi, Mali, Moldova, Mongolia, Nepal, Niger, P ­ araguay, Rwanda, South Sudan, Swaziland, Tajikistan, Turkmenistan, Uganda, Uzbekistan, Zambia and Zimbabwe. i Small island developing states including Antigua and Barbuda, Bahamas, Barbados, Cape Verde, Comoros, Dominica, Fiji, Grenada, Jamaica, Kiribati, Maldives, Marshall Islands, Mauritius, Micronesia, Nauru, Palau, Papua New Guinea, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and Grenadines, Samoa, Sao Tome and Principe, Seychelles, Solomon Islands, Timor-Leste, Tonga, Trinidad and Tobago, Tuvalu and Vanuatu.

4 Inward and outward investment of China

(I)  Actual utilization of foreign capital 1  FDI in China by some countries/regions in 2015 Table 4.1  FDI in China by some countries/regions in 2015 Country/region

Number of Share (%) Foreign capital utilized Share (%) enterprises (US$100 million)

Total

26,590

Some Asian countries/ regions Hong Kong SAR Indonesia Japan Macao SAR Malaysia Philippines Singapore Republic of Korea Thailand Taiwan, China

20,405

76.74

10,361,333

76.42

13,146 49 643 566 224 33 762 1,958 56 2,968

49.45 0.18 2.42 2.13 0.84 0.12 2.87 7.37 0.21 11.14

8,638,672 10,754 319,496 88,540 48,048 3,867 690,407 403,401 4,438 153,710

63.72 0.08 2.36 0.65 0.35 0.03 5.09 2.98 0.03 1.13

1,612 30 42 342 425 208 22 204 26 121 3 8 80 35

6.06 0.11 0.16 1.29 1.60 0.78 0.08 0.77 0.10 0.46 0.01 0.03 0.30 0.13

639,565 7,629 10,466 49,648 155,636 122,390 45,157 24,519 63,011 75,179 7 202 19,726 7,842

4.72 0.06 0.08 0.37 1.15 0.90 0.33 0.18 0.46 0.55 0.00 0.00 0.15 0.06

Major EU countries Belgium Denmark United Kingdom Germany France Ireland Italy Luxembourg Netherlands Greece Portugal Spain Austria

100

13,557,619

100

Inward and outward investment of China  289 Country/region

Number of Share (%) Foreign capital utilized Share (%) enterprises (US$100 million)

Finland Sweden North America Canada United States Some free ports Mauritius Barbados Cayman Islands British Virgin Islands Samoa Others

14 52

0.05 0.20

5,432 52,721

0.04 0.39

1,619 378 1,241

6.09 1.42 4.67

231,281 22,392 208,889

1.71 0.17 1.54

850 24 1 112 373 340

3.20 0.09 0.00 0.42 1.40 1.28

1,120,845 34,601 3,911 144,446 738,778 199,109

8.27 0.26 0.03 1.07 5.45 1.47

2,104

7.91

1,204,595

8.88

Source: Statistics of foreign investment of the Ministry of Commerce of China.

2  FDI in China by some countries/regions as of 2015 Table 4.2  FDI in China by some countries/regions as of 2015 Country/region

Number of enterprises

Share (%) Foreign capital Share (%) utilized (US$ million)

Total

833,601

100

Some Asian countries/regions Hong Kong SAR Indonesia Japan Macao SAR Malaysia Philippines Singapore Republic of Korea Thailand Taiwan, China

642,783 386,213 1,852 49,840 14,398 5,791 2,905 22,481 59,740 4,259 95,304 38,818 960 898 8,106 9,002 4,997 324 5,432 423

Major EU countries Belgium Denmark United Kingdom Germany France Ireland Italy Luxembourg

17,409.03

100

77.11 46.16 0.22 5.96 1.72 0.69 0.34 2.69 7.14 0.51 11.39

11,708 8,333.25 24.79 1,018.25 127.85 72.45 32.28 792.21 639.46 40.57 626.89

67.25 47.87 0.14 5.85 0.73 0.42 0.19 4.55 3.67 0.23 3.60

4.66 0.11 0.11 0.97 1.08 0.60 0.04 0.65 0.05

1,016.56 15.14 30.57 196.99 254.66 148.59 16.52 66.63 31.02

5.84 0.09 0.18 1.13 1.46 0.85 0.09 0.38 0.18 continued

290  Basic data Table 4.2 continued Country/region

Number of enterprises

Netherlands Greece Portugal Spain Austria Finland Sweden

Share (%) Foreign capital Share (%) utilized (US$ million)

3,078 133 213 2,203 1,183 509 1,357

0.37 0.02 0.03 0.26 0.14 0.06 0.16

154.87 0.96 1.89 33.19 18.57 10.98 35.98

0.89 0.01 0.01 0.19 0.11 0.06 0.21

North America Canada United States

76,385 13,538 62,847

9.16 1.62 7.51

873.54 98.84 774.70

5.02 0.57 4.45

Some free ports Mauritius Barbados Cayman Islands British Virgin Islands Samoa

37,603 2,421 311 3,168 23,583 8,120

4.51 0.29 0.04 0.38 2.82 0.97

2,223.59 133.15 43.57 301.72 1,491.74 253.41

12.77 0.76 0.25 1.73 8.57 1.46

Other

38,012

4.56

1,587.34

9.12

Source: Statistics of foreign investment of Ministry of Commerce of China.

3  FDI in China as of 2015 Table 4.3  FDI in China as of 2015 Year

Number of enterprises

Foreign capital utilized (US$ million)

Total 1979~1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998

836,595 920 638 2,166 3,073 1,498 2,233 5,945 5,779 7,273 12,978 48,764 83,437 47,549 37,011 24,556 21,001 19,799

17,409.06 17.69 9.16 14.19 19.56 22.44 23.14 31.94 33.93 34.87 43.66 110.08 275.15 337.67 375.21 417.26 452.57 454.63

Inward and outward investment of China  291 Year 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Number of enterprises 16,918 22,347 26,140 34,171 41,081 43,664 44,019 41,496 37,892 27,537 23,442 27,420 27,717 24,934 22,819 23,794 26,584

Foreign capital utilized (US$ million) 403.19 407.15 468.78 527.43 535.05 606.30 724.06 727.15 835.21 1,083.12 940.65 1,147.34 1,239.85 1,210.73 1,239.11 1,285.02 1,355.77

Source: Statistics of foreign investment of Ministry of Commerce of China.

— 450 27,992 5,667 1,499 6,445 981 –625 15,435 — — –3,282 19,627

— 3,369 49,643 9,691 706 20,464 1,000 244 8,700 — — 3,443 23,861

1,659,315 4,354,751 10 11,391 4,915 12,739 259 –2,295 91,063 26,537 — — — 12 1,840 4,123

Asia Afghanistan United Arab Emirates Oman Pakistan Palestine Bahrain Democratic People’s Republic of Korea Timor-Leste Philippines Kazakhstan Republic of Korea Kyrgyzstan Cambodia Qatar Kuwait Laos Lebanon Maldives Malaysia Mongolia

2008

2,650,409 5,590,141

2007

Total

Country/region

2010

2011

2012

2013

— 4,024 6,681 26,512 13,691 21,583 –374 292 20,324 — — 5,378 27,654

— 24,409 3,606 –72,168 8,247 46,651 1,114 2,286 31,355 42 — 16,354 19,386

— 26,719 58,160 34,172 14,507 56,602 3,859 4,200 45,852 — — 9,513 45,104

— 7,490 299,599 94,240 16,140 55,966 8,446 –1,188 80,882 — — 19,904 90,403

4,040,759 4,489,046 4,549,445 6,478,494 1,639 191 29,554 1,761 8,890 34,883 31,458 10,511 –624 1,103 951 337 7,675 33,135 33,328 8,893 — — — 2 — — — 508 586 1,214 5,595 10,946 160 5,440 81,149 26,875 20,339 49,933 8,747 –59 78,148 68 155 61,638 38,879

7,560,426 –122 29,458 –74 16,357 2 –534 8,620

5,652,899 6,881,131 7,465,404 8,780,353 10,784,371

2009

Table 4.4  China’s OFDI flows by country/region, 2007–2015 (Unit: US$ million)

1  China’s OFDI flows by country/region, 2007–2015

(II)  Outward foreign direct investment of China

2015

973 22,495 –4,007 54,887 10,783 43,827 3,579 16,191 102,690 9 72 52,134 50,261

3,381 –2,759 –251,027 132,455 15,155 41,968 14,085 14,444 51,721 — — 48,891 –2,319

8,498,803 10,836,087 2,792 –326 70,534 126,868 1,516 1,095 101,426 31,074 — — — — 5,194 4,121

12,311,985 14,565,713

2014

Bangladesh Myanmar Nepal Japan Cyprus Saudi Arabia Sri Lanka Tajikistan Taiwan, China Thailand Turkey Turkmenistan Brunei Darussalam Uzbekistan Singapore Syria Yemen Iraq Iran Israel India Indonesia Jordan Vietnam Macao SAR Hong Kong SAR

Country/region

2008

364 450 9,231 23,253 99 1 3,903 5,862 30 — 11,796 8,839 –152 904 6,793 2,658 –5 –6 7,641 4,547 161 910 126 8,671 118 182 1,315 3,937 39,773 155,095 –1,126 –117 4,347 1,881 36 –166 1,142 –3,453 222 –100 2,202 10,188 9,909 17,398 60 –163 11,088 11,984 4,731 64,338 1,373,235 3,864,030

2007

2010

2011

2012

1,075 724 1,032 3,303 37,670 87,561 21,782 74,896 118 86 858 765 8,410 33,799 14,942 21,065 — — 8,954 348 9,023 3,648 12,256 15,367 –140 2,821 8,123 1,675 1,667 1,542 2,210 23,411 4 1,735 1,108 11,288 4,977 69,987 23,011 47,860 29,326 782 1,350 10,895 11,968 45,051 –38,304 1,234 1,653 2,011 99 581 493 –463 8,825 –2,679 141,425 111,850 326,896 151,875 343 812 –208 –607 164 3,149 –912 1,407 179 4,814 12,244 14,840 12,483 51,100 61,556 70,214 — 1,050 201 1,158 –2,488 4,761 18,008 27,681 22,609 20,131 59,219 136,129 11 7 18 983 11,239 30,513 18,919 34,943 45,634 9,604 20,288 1,660 3,560,057 3,850,521 3,565,484 5,123,844

2009 4,137 47,533 3,697 43,405 7,634 47,882 7,177 7,233 17,667 75,519 17,855 –3,243 852 4,417 203,267 –805 33,125 2,002 74,527 189 14,857 156,338 77 48,050 39,477 6,282,378

2013 2,502 34,313 4,504 39,445 — 18,430 8,511 10,720 18,370 83,946 10,497 19,515 –328 18,059 281,363 955 596 8,286 59,286 5,258 31,718 127,198 674 33,289 59,610 7,086,730

2014

continued

3,119 33,172 7,888 24,042 176 40,479 1,747 21,931 26,712 40,724 62,831 –31,457 392 12,789 1,045,248 –356 –10,216 1,231 –54,966 22,974 70,525 145,057 158 56,017 108,065 8,978,978

2015

Africa Algeria Egypt Ethiopia Angola Benin Botswana Burkina Faso Burundi Equatorial Guinea Togo Eritrea Cape Verde Gambia Republic of the Congo Democratic Republic of the Congo Djibouti Guinea Guinea-Bissau Ghana Gabon Zimbabwe Cameroon Comoros Cote d’Ivoire Kenya Lesotho

Country/region

Table 4.4 continued

548,476 4,225 1,457 971 –957 1,456 1,406 — — –486 420 –49 48 — 979 2,399 — 832 — 1,099 3,205 –72 169 — –702 2,323 62

100 1,320 — 185 331 1,257 205 — 174 890 —

2008

157,431 14,592 2,498 1,328 4,119 632 187 — — 1,282 270 45 9 — 250 5,727

2007

340 2,698 — 4,935 1,188 1,124 82 — 151 2,812 10

143,887 22,876 13,386 7,429 831 9 1,844 — 69 2,088 891 23 — — 2,807 22,716

2009

423 974 — 5,598 2,344 3,380 1,488 –1 –502 10,122 56

211,199 18,600 5,165 5,853 10,111 176 4,385 — — 2,208 1,177 294 –46 — 3,438 23,619

2010

566 2,455 — 4,007 193 44,003 187 — 87 6,817 3

317,314 11,434 6,645 7,230 7,272 75 2,186 — — 1,247 904 330 — — 681 7,518

2011

— 6,444 — 20,849 3,069 28,747 1,765 50 361 7,873 21

251,666 24,588 11,941 12,156 39,208 506 2,110 — 150 13,884 2,059 196 — — 9,880 34,417

2012

200 10,013 — 12,251 3,210 51,753 5,720 — –479 23,054 —

337,064 19,130 2,322 10,246 22,405 844 1,019 434 109 2,241 2,359 90 13 — 10,994 12,127

2013

953 6,770 172 7,290 2,556 10,118 2,974 — 2,426 27,839 46

320,192 66,571 16,287 11,959 –44,857 744 5,295 445 345 3,313 699 129 10 5 23,860 15,756

2014

2,033 –2,572 224 28,322 4,879 4,675 2,467 — 6,024 28,181 8

297,792 21,057 8,081 17,529 5,774 1,476 8,608 — 206 –1,304 –173 991 — — 15,008 21,371

2015

Liberia Libya Rwanda Madagascar Malawi Mali Mauritius Mauritania Morocco Mozambique Namibia South Africa South Sudan Niger Nigeria Sierra Leone Senegal Seychelles Sao Tome and Principe Sudan Tanzania Tunisia Uganda Zambia Chad Central African Republic

Country/region

— 4,226 –41 1,324 20 672 1,558 –498 264 1,003 91 45,441 — 10,083 39,035 285 24 9 — 6,540 –382 –34 401 11,934 75 —

2007 256 1,054 1,288 6,116 544 –128 3,444 –65 688 5 759 480,786 — –1 16,256 1,142 360 5 — –6,314 1,822 — –670 21,397 947 —

2008 112 –3,855 862 4,256 — 799 1,412 653 1,642 1,585 1,162 4,159 — 3,987 17,186 90 1,104 36 — 1,930 2,158 –130 129 11,180 5,121 —

2009 2,989 –1,050 1,272 3,358 986 305 2,201 577 175 28 551 41,117 — 19,625 18,489 — 1,896 1,228 2 3,096 2,572 –29 2,650 7,505 213 2,581

2010 2,109 4,788 969 2,310 120 4,758 41,946 1,969 911 2,026 504 –1,417 5 5,163 19,742 1,075 19 434 — 91,186 5,312 376 991 29,178 –1,248 248

2011 1,200 –668 502 843 1,033 4,442 5,783 3,087 105 23,052 2,512 –81,491 780 –19,594 33,305 769 447 5,340 7 –169 11,970 –65 979 29,155 8,068 —

2012 3,034 45 –594 1,551 825 10,801 6,107 1,527 774 13,189 705 –8,919 1,149 11,654 20,913 4,003 1,044 1,769 — 14,091 15,064 706 6,060 29,286 12,095 130

2013 4,011 13 1,494 3,676 340 2,339 4,943 –733 1,144 10,251 802 4,209 –682 –4,461 19,977 492 706 756 — 17,407 16,661 71 6,050 42,485 8,312 18,224

2014

continued

9,818 –4,106 406 3,384 5 –3,401 15,477 216 2,603 6,843 1,785 23,317 1,308 2,369 5,058 807 –794 4,958 — 3,171 22,632 564 20,534 9,655 –1,712 30

2015

Europe Albania Azerbaijan Ireland Austria Belarus Bulgaria Belgium Iceland Bosnia and Herzegovina Poland Denmark Germany Russian Federation France Finland Georgia Netherlands Czech Republic Croatia Latvia Lithuania Liechtenstein Luxembourg Romania Malta Macedonia Norway

Country/region

Table 4.4 continued

153,843 — –115 20 8 — — 491 — — 1,175 27 23,866 47,761 962 1 821 10,675 497 120 –174 — 28 419 480 –10 — 360

2007 87,580 — –66 4,233 — 210 — — — — 1,070 133 18,341 39,523 3,105 266 1,000 9,197 1,279 — — — — 4,213 1,198 47 — 9

2008 335,272 — 173 –95 — 210 –243 2,362 — 151 1,037 264 17,921 34,822 4,519 111 778 10,145 1,560 26 –3 — 7 227,049 529 22 — 360

2009 676,019 8 37 3,288 46 1,922 1,629 4,533 –5 6 1,674 161 41,235 56,772 2,641 1,804 4,057 6,453 211 3 — — 355 320,719 1,084 –237 — 13,473

2010 825,108 — 1,768 1,693 2,022 867 5,390 3,590 — 4 4,866 589 51,238 71,581 348,232 156 80 16,786 884 5 — — — 126,500 30 27 — 1,857

2011 703,509 — 34 4,888 5,343 4,350 5,417 9,840 — 6 750 514 79,933 78,462 15,393 136 6,874 44,245 1,802 5 — 100 — 113,301 2,541 — 6 849

2012 594,853 56 –443 11,702 15 2,718 2,069 2,578 — — 1,834 2,739 91,081 102,225 26,044 852 10,962 23,842 1,784 — — 551 — 127,521 217 12 — 19,629

2013

2015

1,083,790 711,842 — — 1,683 136 3,711 1,430 4,371 10,432 6,372 5,421 2,042 5,916 15,328 2,346 — — — 162 4,417 2,510 5,723 –2,416 143,892 40,963 63,356 296,086 40,554 32,788 1,042 3,868 22,435 4,398 102,997 1,346,284 246 –1,741 355 — — 45 — — 363 64 457,837 –1,145,317 4,225 6,332 193 503 — –1 5,860 –167,589

2014

2007

— 6,806 121 — — 565 609 3 863 810 56,654

490,241 13,669 — 41 3,899 — 833 5,113 197 — — — 358 22 — —

Country/region

Portugal Sweden Switzerland Serbia Slovakia Ukraine Spain Greece Hungary Italy United Kingdom

Latin America Argentina Antigua and Barbuda Barbados Bahamas Paraguay Panama Brazil Bolivia Belize Dominica Dominican Republic Ecuador Colombia Costa Rica Grenada

367,726 1,082 — 82 –5,591 300 652 2,238 414 6 6 — –942 676 — 12

— 1,066 1 — — 241 116 12 215 500 1,671

2008 — 136,723 2,725 210 46 150 2,926 — 37,010 1,327 33,033

2010 — 4,901 1,719 21 594 77 13,974 43 1,161 22,483 141,970

2011

732,790 1,053,827 1,193,582 2,723 18,515 –2,282 — — 101 87 –211 — 100 — — 647 2,783 557 1,369 2,606 116 11,627 48,746 12,640 1,801 306 867 — –8 — 6 — — — — 50 1,790 2,206 –3,506 574 694 3,325 — 8 1 — — —

— 810 2,099 — 26 3 5,986 — 821 4,605 19,217

2009

616,974 74,325 — 81 — 142 72 19,410 4,321 — — — 31,139 8,351 — —

515 28,522 864 210 219 207 4,624 88 4,140 11,858 277,473

2012

1,435,895 22,141 — 92 — 18 18,768 31,093 1,440 35 — 30 47,060 1,793 117 —

1,494 17,082 12,826 1,150 33 1,014 –14,575 190 2,567 3,126 141,958

2013

1,054,739 26,992 — –167 — — 481 73,000 2,453 35 — — 13,781 18,310 –19 —

387 13,001 3,364 1,169 4,566 472 9,235 — 3,402 11,302 149,890

2014

continued

1,261,035 20,832 — –28 — — 2,382 –6,328 3,432 — — — 11,811 370 384 —

1,072 31,719 24,677 763 — –76 14,967 –137 2,320 9,101 184,816

2015

77,008 53,159 19,681 249

112,571 –10,259 103,257 19,573

North America Bermuda Canada United States

Oceania Australia Papua New Guinea Fiji

242 — — 978 — 214 — 210,433 93

1,757 — — 6,953 48 — — 187,614 383

195,186 189,215 2,992 797

36,422 –10,484 703 46,203

556 — –90 152,401 2,455 563 — — 946

2008

658 6,000 –438 260,159 671 1,716 — — 588

2007

Cuba Guyana Honduras Cayman Islands Peru Mexico Nicaragua Saint Lucia Saint Vincent and the Grenadines Suriname Trinidad and Tobago Guatemala Venezuela Uruguay Jamaica Anguilla British Virgin Islands Chile

Country/region

Table 4.4 continued

247,998 243,643 480 240

152,193 6 61,313 90,874

110 — — 11,572 498 — — 161,205 778

1,293 — — 536,630 5,849 82 — — –946

2009

188,896 170,170 533 557

262,144 17,086 114,229 130,829

635 — — 9,439 36 221 — 611,976 3,371

–1,635 2,837 — 349,613 13,903 2,673 — — 905

2010

331,823 316,529 1,665 1,963

248,132 11,583 55,407 181,142

— 10 — 8,177 36 3,545 — 620,833 1,399

7,671 20 — 493,646 21,425 4,154 — — —

2011

241,510 217,298 2,569 6,832

488,200 3,899 79,516 404,785

–3,323 19 — 154,176 950 3,586 — 223,928 2,622

–557 9,884 — 82,743 –4,937 10,042 — — —

2012

366,032 345,798 4,302 5,832

490,101 1,893 100,865 387,343

2,900 23 — 42,556 967 474 — 322,156 1,179

–2,437 3,500 — 925,340 11,460 4,973 217 — —

2013

433,695 404,911 3,037 –3,716

920,766 70,769 90,384 759,613

–1,690 3,625 63 11,608 108 11,132 — 457,043 1,629

–2,222 408 — 419,172 4,507 14,057 101 — 332

2014

387,109 340,131 4,177 1,240

1,071,848 112,698 156,283 802,867

2,009 915 — 28,830 3,615 — 100 184,900 685

4,243 –389 — 1,021,303 –17,776 –628 55 15 303

2015

2007

— 3,416 625 50 –12 — — –160

Country/region

Cook Islands Marshall Islands Micronesia Palau Samoa Tonga Vanuatu New Zealand

— 800 –16 752 — — — 646

2008 — 2,670 — — 63 — — 902

2009 — 1,318 — 50 9,893 — — 6,375

2010 — –2,743 –289 57 11,773 — 79 2,789

2011 12 — 341 — 4,759 — 293 9,406

2012 17 –1,210 46 — –7,793 — — 19,040

2013

–27 — 339 51 3,484 10 604 25,002

2014

— –5,682 355 150 9,586 98 2,245 34,809

2015

Asia Afghanistan* United Arab Emirates Oman Pakistan Palestine Bahrain Democratic People’s Republic of Korea* Timor-Leste Philippines Kazakhstan* Republic of Korea* Kyrgyzstan* Cambodia Qatar* Kuwait Laos Lebanon Maldives Malaysia* Mongolia* Bangladesh

Total

Country/region

45 4,304 60,993 121,414 13,975 16,811 3,979 51 30,222 44 — 27,463 59,217 4,330

7,921,793 77 23,431 3,717 106,819 — 75 6,713

11,791,050

2007

2010

24,575,539 31,721,059

2009

45 8,673 140,230 85,034 14,681 39,066 4,979 296 30,519 44 — 36,120 89,556 4,814

745 14,259 151,621 121,780 28,372 63,326 3,628 588 53,567 157 — 47,989 124,166 6,030

745 38,734 159,054 63,725 39,432 112,977 7,705 5,087 84,575 201 — 70,880 143,552 6,758

13,131,699 18,554,720 22,814,597 11,469 18,132 16,859 37,599 44,029 76,429 1,422 797 2,111 132,799 145,809 182,801 — — — 87 87 87 11,863 26,152 24,010

18,397,071

2008

2011

2012

2013

2014

2015

745 49,427 285,845 158,268 52,505 175,744 13,018 9,286 127,620 201 — 79,762 188,662 7,668

745 59,314 625,139 308,190 66,219 231,768 22,066 8,284 192,784 301 — 102,613 295,403 11,725

905 69,238 695,669 196,308 88,582 284,857 25,402 8,939 277,092 369 165 166,818 335,396 15,868

1,578 75,994 754,107 277,157 98,419 322,228 35,387 34,591 449,099 378 237 178,563 376,246 16,024

30,343,470 36,440,706 44,640,828 60,096,561 46,513 48,274 48,742 51,849 117,450 133,678 151,457 233,345 2,938 3,335 17,473 18,972 216,299 223,361 234,309 373,682 — 2 4 4 102 680 146 376 31,261 42,236 58,551 61,157

10,028 71,105 509,546 369,804 107,059 367,586 44,993 54,362 484,171 378 237 223,137 376,006 18,843

76,890,132 41,993 460,284 20,077 403,593 4 387 62,500

42,478,067 53,194,058 66,047,840 88,264,242 1,097,86,459

Table 4.5  China’s OFDI stocks by country/region, 2007–2015 (unit: US$ million)

2  China’s OFDI stocks by country/region, 2007–2015

Myanmar Nepal Japan* Cyprus Saudi Arabia Sri Lanka Tajikistan Taiwan, China Thailand Turkey* Turkmenistan Brunei Darussalam Uzbekistan Singapore* Syria Yemen Iraq Iran Israel India* Indonesia Jordan Vietnam Macao SAR Hong Kong SAR*

Country/region

26,177 866 55,827 136 40,403 774 9,899 15 37,862 1,199 142 438 3,082 144,393 555 10,723 2,245 12,235 1,087 12,014 67,948 1,195 39,699 91,067 6,878,132

2007

2009

2010

49,971 92,988 194,675 867 1,413 1,594 50,969 69,286 110,563 136 136 136 62,068 71,089 76,056 1,678 1,581 7,274 22,717 16,279 19,163 9 13 1,819 43,716 44,788 108,000 2,236 38,617 40,363 8,813 20,797 65,848 651 1,737 4,566 8,300 7,764 8,522 333,477 485,732 606,910 438 849 1,661 14,054 14,930 18,466 2,079 2,258 48,345 9,427 21,780 71,516 987 1,137 2,187 22,202 22,127 47,980 54,333 79,906 115,044 1,032 1,054 1,263 52,173 72,850 98,660 156,078 183,723 222,929 11,584,528 16,449,894 19,905,557

2008

2012

2013

2014

218,152 309,372 356,968 392,557 2,480 3,358 7,531 13,834 136,622 161,991 189,824 254,704 9,090 9,495 17,126 10,717 88,314 120,586 174,706 198,743 16,258 17,858 29,265 36,391 21,674 47,612 59,941 72,896 2,935 13,532 34,927 59,862 130,726 212,693 247,243 307,947 40,648 50,251 64,231 88,181 27,648 28,777 25,323 44,760 6,613 6,635 7,212 6,955 15,647 14,618 19,782 39,209 1,060,269 1,238,333 1,475,070 2,063,995 1,483 1,446 641 1,455 19,145 22,130 54,911 55,507 60,591 75,432 31,706 37,584 135,156 207,046 285,120 348,415 2,388 3,846 3,405 8,665 65,738 116,910 244,698 340,721 168,791 309,804 465,665 679,350 1,281 2,254 2,343 3,098 129,066 160,438 216,672 286,565 267,589 292,927 240,914 393,074 26,151,852 30,637,245 37,709,314 50,991,983

2011

continued

425,873 29,193 303,820 10,915 243,439 77,251 90,909 96,905 344,012 132,884 13,304 7,352 88,204 3,198,491 1,100 45,330 38,812 294,919 31,718 377,047 812,514 3,255 337,356 573,912 65,685,524

2015

Africa Algeria* Egypt* Ethiopia Angola Benin Botswana Burkina Faso Burundi Equatorial Guinea* Togo Eritrea Cape Verde Gambia Republic of the Congo* Democratic Republic of the Congo* Djibouti Guinea Guinea-Bissau Ghana Gabon Zimbabwe Cameroon Comoros Cote d’Ivoire Kenya Lesotho

Country/region

Table 4.5 continued

851,184 50,882 13,135 12,645 6,889 5,315 6,526 — 165 4,062 2,312 673 513 119 7,542 13,414 160 9,637 — 5,802 8,814 6,001 2,034 405 2,116 78,636 822

160 6,997 — 4,187 5,559 5,915 1,851 405 2,818 5,513 760

2008

446,183 39,389 13,160 10,888 7,846 3,560 4,339 — 165 4,463 1,442 722 465 119 6,540 10,440

2007

703 12,932 2,700 18,504 10,005 9,975 2,505 405 3,765 12,036 832

933,227 75,126 28,507 28,344 19,554 5,401 11,925 — 464 6,150 3,302 960 504 119 11,517 39,743

2009

1,247 13,641 2,700 20,200 12,534 13,454 5,961 404 3,299 22,158 888

1,334,212 93,726 33,672 36,806 35,177 3,933 17,852 — 651 8,625 5,811 1,254 458 119 13,588 63,092

2010

1,813 16,843 2,700 27,015 12,710 57,644 6,154 404 3,467 30,883 891

1,624,432 105,945 40,317 42,679 40,059 4,003 20,038 — 720 9,868 6,715 1,431 458 119 14,240 70,926

2011

1,799 23,467 2,700 50,527 12,847 87,467 7,950 454 4,004 40,273 913

2,172,972 130,533 45,919 60,655 124,510 4,760 22,015 — 870 40,464 9,839 10,378 1,160 119 50,490 97,049

2012

3,055 33,858 2,700 83,484 16,848 152,083 14,840 454 3,500 63,590 913

2,618,577 149,721 51,113 77,184 163,474 4,991 23,090 434 979 26,085 12,309 10,455 1,523 119 69,543 109,176

2013

4,008 41,907 6,682 105,669 18,041 169,558 17,784 454 6,429 85,371 1,107

3,235,061 245,157 65,711 91,462 121,404 6,917 26,213 878 1,324 20,820 13,581 10,671 1,518 124 98,876 216,867

2014

6,046 38,272 6,906 127,449 24,442 179,892 20,734 453 12,678 109,904 1,115

3,469,440 253,155 66,315 113,013 126,829 8,731 32,108 — 1,237 23,163 12,882 11,941 1,518 124 108,867 323,935

2015

Liberia* Libya Rwanda Madagascar* Malawi Mali Mauritius Mauritania Morocco Mozambique Namibia* South Africa* South Sudan Niger* Nigeria Sierra Leone Senegal Seychelles Sao Tome and Principe Sudan Tanzania Tunisia Uganda Zambia* Chad* Central African Republic*

Country/region

2,978 7,083 730 7,601 116 3,222 11,590 1,514 2,965 3,424 724 70,237 — 13,453 63,032 3,228 439 655 — 57,485 11,092 357 1,868 42,936 1,353 398

2007 3,736 8,158 2,018 14,652 659 3,095 23,007 2,476 2,806 4,300 1,995 304,862 — 13,650 79,591 4,370 1,061 660 — 52,825 19,022 357 1,198 65,133 2,536 398

2008 5,639 4,269 2,880 19,622 1,454 4,472 24,284 3,129 4,878 7,496 4,618 230,686 — 18,420 102,596 5,123 2,607 700 — 56,389 28,179 227 5,856 84,397 7,657 1,671

2009 8,167 3,219 4,163 22,987 3,240 4,777 28,329 4,588 5,585 7,524 4,711 415,298 — 37,936 121,085 4,148 4,503 1,936 31 61,336 60,751 253 11,368 94,373 8,000 4,654

2010 11,474 6,778 5,852 25,363 3,007 16,006 60,594 7,471 8,948 9,807 6,021 405,973 5 42,957 141,561 5,223 4,520 2,380 31 152,564 40,707 629 12,621 119,984 10,812 5,102

2011 15,437 6,519 6,354 27,455 4,930 21,143 70,080 10,615 9,522 33,691 9,453 477,507 1,090 12,533 194,987 5,771 10,222 7,719 38 123,660 54,080 569 14,110 199,811 19,412 5,102

2012 19,610 10,882 7,333 28,610 25,382 31,667 84,959 10,828 10,296 50,809 34,945 440,040 2,647 24,187 214,607 10,836 8,325 10,347 38 150,704 71,646 1,386 38,376 216,432 32,126 6,038

2013 22,965 10,984 11,072 35,261 25,762 34,286 57,971 10,095 11,444 65,386 98,184 595,402 1,926 19,808 232,301 14,774 13,001 11,440 38 174,712 88,518 1,456 46,410 227,199 40,461 5,708

2014

continued

28,899 10,577 12,357 34,770 25,815 30,733 109,658 10,583 15,629 72,452 38,044 472,297 3,598 56,544 237,676 19,630 12,602 16,011 38 180,936 113,887 2,084 72,215 233,802 42,272 4,622

2015

Europe Albania Azerbaijan Ireland* Estonia Austria Belarus Bulgaria Belgium Iceland Poland Bosnia and Herzegovina Denmark* Germany* Russian Federation* France* Finland Georgia* Netherlands* Montenegro Czech Republic Croatia Latvia Lithuania Liechtenstein Luxembourg* Romania

Country/region

Table 4.5 continued

513,397 51 953 10,777 126 404 239 474 3,330 5 10,993 351 3,808 84,550 183,828 16,713 359 6,586 23,442 32 3,243 784 57 393 28 12,283 8,566

3,675 84,541 142,151 12,681 94 4,293 13,876 32 1,964 784 57 393 28 6,702 7,288

2008

445,490 51 1,019 2,923 126 40 29 474 3,398 5 9,893 351

2007 1,571,031 443 1,238 13,991 750 201 2,371 1,860 10,101 — 14,031 598 4,247 150,229 278,756 24,362 2,725 13,017 48,671 32 5,233 813 54 393 391 578,675 12,495

4,079 108,224 222,037 22,103 904 7,533 33,587 32 4,934 810 54 393 36 248,438 9,334

2010

867,681 435 1,200 10,682 750 155 449 234 5,691 5 12,030 592

2009

4,913 240,144 376,364 372,389 3,100 10,935 66,468 32 6,683 818 54 393 391 708,197 12,583

2,445,002 443 3,006 15,683 750 2,454 2,907 7,256 14,050 — 20,125 601

2011

5,324 310,435 488,849 395,077 3,403 17,808 110,792 32 20,245 863 54 697 391 897,789 16,109

3,697,513 443 3,168 19,377 350 7,946 7,747 12,674 23,069 — 20,811 607

2012

8,437 397,938 758,161 444,794 4,255 33,075 319,309 32 20,468 831 54 1,248 391 1,042,376 14,513

5,316,156 703 3,834 32,325 350 7,666 11,590 14,985 31,501 — 25,704 613

2013

20,815 578,550 869,463 844,488 5,899 54,564 419,408 32 24,269 1,187 54 1,248 1,240 1,566,677 19,137

6,939,985 703 5,521 24,972 350 20,170 25,752 17,027 49,347 — 32,935 613

2014

8,217 588,176 1,401,963 572,355 9,507 53,375 2,006,713 32 22,431 1,182 94 1,248 1,304 773,988 36,480

8,367,897 695 6,370 24,832 350 32,799 47,589 23,597 51,953 110 35,211 775

2015

Latin America Argentina Antigua and Barbuda Barbados Bahamas Paraguay Panama Brazil* Bolivia* Belize

Malta Macedonia Moldova* Norway* Portugal Sweden Switzerland Serbia Serbia and Montenegro Slovakia Slovenia Ukraine Spain Greece* Hungary Armenia* Italy United Kingdom*

Country/region

2,470,091 15,719 125 242 5,651 — 5,531 18,955 2,303 2

187 20 78 375 171 14,693 888 200 — 510 140 1,351 14,285 38 7,817 125 12,713 95,031

2007

3,224,015 17,336 125 325 60 478 6,738 21,705 2,862 8

481 20 78 385 171 15,759 891 200 — 510 140 1,592 14,501 168 8,875 125 13,360 83,766

2008

3,211,548 168,905 125 600 160 1,125 8,109 36,089 5,565 8

503 20 78 1,295 502 11,189 3,030 268 — 936 500 2,079 20,523 168 9,741 132 19,168 102,828

2009

4,387,566 21,899 125 388 160 3,907 23,658 92,365 6,485 —

266 20 78 14,776 2,137 147,912 5,854 484 — 982 500 2,229 24,776 423 46,570 132 22,380 135,835

2010

5,517,175 40,525 484 313 160 4,465 33,078 107,179 6,632 —

337 20 78 16,659 3,313 153,122 9,194 505 — 2,578 500 2,929 38,931 463 47,535 132 44,909 253,058

2011

6,821,163 89,719 544 395 60 4,606 19,662 144,951 15,619 —

337 26 211 18,813 4,039 240,817 10,132 647 — 8,601 500 3,314 43,725 598 50,741 132 57,393 893,427

2012 542 211 387 522,350 6,069 301,292 38,766 2,971 — 12,779 500 6,341 42,453 12,083 55,635 751 71,969 1,280,465

2014

8,609,593 10,608,113 165,820 179,152 630 630 497 330 60 60 4,624 4,791 47,864 20,493 283,289 173,358 11,892 13,217 35 70

349 209 387 477,171 5,532 273,771 29,654 1,854 — 8,277 500 5,198 31,571 11,979 53,235 751 60,775 1,179,790

2013

continued

12,561,415 194,892 630 289 60 4,791 22,815 225,712 31,746 70

1,045 211 211 347,129 7,142 338,196 60,415 4,979 — 12,779 500 6,890 60,801 11,948 57,111 751 93,197 1,663,246

2015

Dominica Dominican Republic Ecuador Colombia Costa Rica Grenada Cuba Guyana Honduras Cayman Islands* Peru* Mexico* Nicaragua El Salvador Saint Lucia Saint Vincent and the Grenadines Suriname Trinidad and Tobago* Guatemala Venezuela Uruguay* Jamaica* Anguilla British Virgin Islands Chile

Country/region

Table 4.5 continued

6 70 8,860 1,371 — 765 7,205 6,950 — 2,032,745 19,434 17,308 — — — 3,249 6,770 80 — 15,596 211 216 — 1,047,733 5,809

6,528 80 — 14,388 211 2 — 662,654 5,680

2008

— 70 4,918 677 — 753 6,649 6,860 90 1,681,068 13,711 15,144 — — — 2,080

2007

6,880 80 — 27,196 715 216 — 1,506,069 6,602

12 70 10,660 2,050 200 765 8,532 14,961 — 1,357,707 28,454 17,390 — — — 2,303

2009

7,884 80 — 41,652 751 439 — 2,324,276 10,958

12 415 12,958 2,297 208 1,452 6,898 18,317 — 1,725,627 65,449 15,287 — — — 3,619

2010

7,884 90 — 50,100 815 3,907 — 2,926,141 9,794

12 815 9,524 5,980 209 1,454 14,637 13,513 — 2,169,232 80,224 26,388 — — — 3,620

2011

4,561 109 — 204,276 1,765 7,493 — 3,085,095 12,628

112 815 40,763 34,615 209 1,454 13,569 15,188 — 3,007,200 75,287 36,848 — — — 3,620

2012

11,193 386 — 236,338 2,593 7,968 — 3,390,298 17,904

100 845 100,879 36,869 326 1,454 11,134 22,518 — 4,232,406 86,778 40,987 217 — — 3,620

2013

9,393 102,531 99 249,323 21,081 18,837 — 4,932,041 19,583

101 315 91,460 54,730 398 2,367 6,255 24,757 — 4,423,672 90,798 54,121 318 1 — 3,900

2014

continued

11,352 60,463 99 280,029 18,273 22,568 100 5,167,214 20,464

101 315 105,635 55,443 782 2,367 12,062 25,601 — 6,240,408 70.549 52,476 367 1 15 4,204

2015

324,089 10,584 125,452 188,053

183,040 144,401 25,811 2,242 — — 3,616 741 50 78 711 273 5,117 —

North America Bermuda* Canada* United States*

Oceania Australia Papua New Guinea* Fiji* Kiribati Cook Islands Marshall Islands Micronesia Palau Samoa Tonga Vanuatu* New Zealand Other countries and regions in Oceania

381,600 335,529 28,993 3,060 — — 4,416 725 850 78 711 273 6,965 —

365,978 145 126,843 238,990

2008

641,895 586,310 31,511 3,300 — — 8,086 725 852 240 711 775 9,385 —

518,470 17,594 167,034 333,842

2009

860,729 786,775 32,326 3,943 — — 7,352 725 902 10,133 711 1,284 15,911 667

782,926 35,267 260,260 487,399

2010

1,200,744 1,104,125 34,152 6,107 — — 10,737 436 959 22,979 711 1,992 18,546 —

1,347,243 75,184 372,756 899,303

2011

Note *Means that the data of the country (region) at the end of 2015 includes adjustment to historical data.

2007

Country/region

1,511,407 1,387,305 36,548 17,091 — 12 11,687 777 959 26,601 711 2,331 27,385 —

2,550,299 337,250 505,072 1,707,977

2012

1,901,712 1,744,968 42,230 20,841 82 29 11,687 823 959 18,808 711 6,401 54,173 —

2,860,974 51,399 619,619 2,189,956

2013

2,586,425 2,388,226 46,002 11,998 82 7 11,687 1,162 1,010 22,308 721 6,981 96,241 —

4,795,149 215,144 778,908 3,801,097

2014

3,209,171 2,837,385 191,183 9,792 293 7 6,005 1,517 1,160 30,691 819 9,447 120,872 —

5,217,926 286,106 851,625 4,080,195

2015

308  Basic data 3  China’s OFDI in BRI countries/regions in 2015 Table 4.6  China’s OFDI in BRI countries/regions in 2015 (unit: US$10,000) Country/region

Flow

Stock

Total Algeria Afghanistan United Arab Emirates Oman Azerbaijan Egypt Estonia Pakistan Palestine Bahrain Belarus Bulgaria Bosnia and Herzegovina Poland Timor-Leste Russian Federation Philippines Georgia Kazakhstan Montenegro Kyrgyzstan Cambodia Czech Republic Qatar Kuwait Croatia Latvia Laos Lebanon Lithuania Romania Maldives Malaysia Macedonia Mongolia Bangladesh Myanmar Moldova Nepal Serbia Saudi Arabia Sri Lanka Slovakia Slovenia Tajikistan

1,892,890 — –326 126,868 1,095 136 8,081 — 32,074 — — 5,421 5,916 162 2,510 3,381 296,086 –2,759 4,398 –251,027 — 15,155 41,968 –1,741 14,085 14,444 — 45 51,721 — — 6,332 — 48,891 –1 –2,319 3,119 33,172 — 7,888 763 40,479 1,747 — — 21,931

11,559,147 695 41,993 460,284 20,077 6,370 66,315 350 403,593 4 387 47,589 23,597 775 35,211 10,028 1,401,963 71,105 53,375 509,546 32 107,059 367,586 22,431 44,993 54,362 1,182 94 484,171 378 1,248 36,480 237 223,137 211 376,006 18,843 425,873 211 29,193 4,979 243,439 77,251 12,779 500 90,909

Inward and outward investment of China  309 Country/region

Flow

Thailand Turkey Turkmenistan Brunei Darussalam Ukraine Uzbekistan Singapore Hungary Syria Armenia Yemen Iraq Iran Israel India Indonesia Jordan Vietnam

40,724 62,831 –31,457 392 –76 12,789 1,045,248 2,320 –356 — –10,216 1,231 –54,966 22,974 70,525 145,057 158 56,017

Stock 344,012 132,884 13,304 7,352 6,890 88,204 3,198,491 57,111 1,100 751 45,330 38,812 294,919 22,974 377,047 812,514 3,255 337,356

5 Inward and outward investment of China by region

(I)  Foreign investment 1  FDI in 2015, by region Table 5.1  FDI in 2015, by region Region

Number of enterprises

Share (%)

Foreign capital utilized Share (%) (US$ million)

Total East China Central China West China Relevant departments

26,584 23,502 1,872 1,201 9

100 88.41 7.04 4.52 0.03

1,355.77 1,058.68 104.44 99.55 93.10

100 78.09 7.70 7.34 6.87

Source: Statistics of foreign investment of Ministry of Commerce of China. Notes Data of foreign direct investment absorbed by banking, securities and insurance institutions are included under the item of relevant departments. East China includes Beijing, Tianjin, Hebei, Liaoning, Shanghai, Jiangsu, Zhejiang, Fujian, Shandong, Guangdong, Hainan. Central China includes Shanxi, Jilin, Heilongjiang, Anhui, Jiangxi, Henan, Hubei, Hunan. West China includes Inner Mongolia, Guangxi, Sichuan, Chongqing, Guizhou, Yunnan, Shaanxi, Gansu, Qinghai, Ningxia, Xinjiang, Tibet.

2  FDI as of 2015, by region Table 5.2  FDI as of 2015, by region Region

Number of enterprises

Share (%)

Foreign capital utilized Share (%) (US$ million)

Total East China Central China West China Relevant departments

836,595 700,587 87,443 48,374 191

100 83.74 10.45 5.78 0.02

17,409.06 13,991.19 1,338.86 1,093.14 985.87

100 80.37 7.69 6.28 5.66

Source: Statistics of foreign investment of Ministry of Commerce of China. Note Data of foreign direct investment absorbed by banking, securities and insurance institutions are included under the item of relevant departments.

Investment of China by region  311

(II)  Outward investment 1  Global distribution of China’s OFDI by 2015 Table 5.3  Global distribution of China’s OFDI by 2015 Continent

Total number Number of Investment Number of Share of countries countries (regions) coverage overseas Chinese (%) (regions) with China’s OFDI rate (%) enterprises

Asia Europe Africa North America Latin America Oceania Total

48 49 60 4 49 24 234

46 43 51 3 33 12 188

97.9 87.8 85 75 67.3 50 80.3

17,108 3,548 2,949 4,433 1,769 1,007 30,814

55.5 11.5 9.6 14.4 5.7 3.3 100

Notes China is included in the number of Asian countries but not when calculating investment coverage rate. Investment coverage rate is the ratio of the number of countries with China’s OFDI to the total number of countries and regions in the continent concerned.

2  Non-financial OFDI flows of China by region, 2007–2015

1,958,488

525,341 15,295 7,993 5,394 8,347 4,235 12,833 6,542 8,322 17,851 52,266 51,899 40,346 5,253 5,079 36,847 19,099 1,536 18,928 4,898 7,036 903 14,088 114,101

2. Total at local level Beijing Tianjin Hebei Shanxi Inner Mongolia Liaoning Including: Dalian Jilin Heilongjiang Shanghai Jiangsu Zhejiang Including: Ningbo Anhui Fujian Including: Xiamen Jiangxi Shandong Including: Qingdao Henan Hubei Hunan Guangdong

2007

1. Total at central level

Region

2009

2010

587,631 47,299 8,200 5,363 2,702 6,190 10,600 4,427 10,673 22,797 33,714 49,384 38,768 22,515 6,051 16,169 4,159 2,587 47,478 1,547 13,128 350 25,446 124,251

960,250 1,774,543 45,185 76,614 20,992 34,132 21,993 53,237 33,295 7,926 15,547 8,042 75,786 193,566 46,384 163,229 29,814 21,340 12,131 23,780 120,869 158,468 85,061 137,119 70,226 267,915 21,097 39,460 5,782 81,365 36,582 53,495 12,389 22,881 2,265 9,470 70,441 189,001 10,472 46,197 12,075 11,864 4,116 8,061 100,568 27,477 92,298 159,977

3,598,284 3,819,275 4,243,698

2008

2011

2,366,036 117,503 40,706 46,363 18,319 12,825 114,384 74,591 20,493 23,834 183,802 225,383 185,287 75,573 53,089 53,028 15,276 18,833 247,339 23,466 28,251 70,903 117,628 363,350

4,502,314

Table 5.4  Non-financial OFDI flows of China by region, 2007–2015 (unit: US$ million) 2013

2014

3,420,576 3,641,307 5,472,588 168,855 413,010 727,353 67,495 112,020 414,637 57,809 92,575 121,865 30,966 56,483 30,491 51,845 40,880 110,969 276,260 129,499 147,902 203,087 104,450 57,481 29,641 75,240 33,310 72,405 77,338 65,531 331,618 267,524 499,225 313,050 302,001 406,983 236,023 255,276 386,170 63,839 84,468 103,663 71,043 91,055 38,029 85,705 95,249 105,064 23,400 26,463 26,523 37,316 38,091 73,853 345,621 426,472 391,590 91,985 102,267 121,749 34,117 58,971 54,692 49,687 52,011 67,161 99,499 56,970 78,449 528,821 594,288 1,089,671

4,352,693 5,632,447 5,247,617

2012

9,360,412 1,228,033 252,654 94,030 18,611 40,447 212,204 134,920 65,823 42,388 2,318,288 725,000 710,816 251,456 206,747 275,743 99,523 100,457 710,983 127,774 131,284 63,596 112,370 1,226,250

2,781,752

2015

Total

Including: Shenzhen Guangxi Hainan Chongqing Sichuan Guizhou Yunnan Tibet Shaanxi Gansu Qinghai Ningxia Xinjiang Xinjiang Production and Construction Corps

Region

2,483,829

92,433 2,620 122 8,713 29,120 51 13,641 — 2,058 15,364 110 569 8,535 21,139

2007 41,447 8,169 6,072 4,747 10,740 522 27,008 — 22,462 1,852 209 1,509 18,057 3,877

2009 60,878 18,682 22,179 36,109 69,097 289 51,339 29 26,055 10,179 138 711 4,776 12,111

2010

4,185,915 4,779,525 6,018,241

76,375 3,844 82 10,448 8,107 25 28,467 — 14,063 35,808 202 502 6,934 7,999

2008

6,858,350

113,306 16,714 121,999 40,125 56,341 2,033 24,845 216 44,816 64,917 173 1,295 31,474 9,768

2011 300,814 8,134 81,731 34,655 58,447 20,815 83,036 22 30,789 43,182 3,596 8,626 31,579 1,742

2013 598,933 22,864 88,708 76,676 138,223 8,764 126,195 385 41,411 27,321 1,601 33,883 54,832 8,780

2014

645,920 45,091 120,119 149,638 118,730 6,539 94,648 29,681 62,408 12,293 7,826 108,959 61,077 7,679

2015

7,773,269 9,273,754 10,720,205 12,142,164

336,833 27,240 32,012 52,960 59,509 2,025 104,046 2 60,784 138,209 1,280 6,421 43,123 5,189

2012

2,753,597 251,019 32,161 52,415 18,159 20,405 60,554 34,888 37,929 99,353 218,611 172,677 154,716 46,039 20,379 113,231 31,666 9,126 208,025 59,636 33,001 5,600 67,427 868,514

2,174,684 159,195 25,200 38,248 27,200 13,984 44,395 25,539 21,554 71,144 302,538 116,499 116,259 23,510 15,351 91,608 21,242 5,478 161,360 69,325 21,703 4,972 29,344 724,311

2. Total at local level Beijing Tianjin Hebei Shanxi Inner Mongolia Liaoning Including: Dalian Jilin Heilongjiang Shanghai Jiangsu Zhejiang Including: Ningbo Anhui Fujian Including: Xiamen Jiangxi Shandong Including: Qingdao Henan Hubei Hunan Guangdong

2008

7,944,376 11,974,085

2007

1. Total at central level

Region

3,961,809 375,865 58,116 88,692 53,339 40,100 149,230 83,094 70,767 106,235 358,937 249,872 295,923 65,048 27,594 158,800 38,813 12,905 262,255 46,487 57,655 9,992 204,782 954,523

16,014,326

2009

2011

2012

6,016,945 480,882 96,729 137,724 63,654 47,055 340,696 247,520 89,958 128,044 609,433 388,814 584,528 106,430 110,842 196,773 60,443 22,136 495,823 123,774 70,689 17,794 271,626 1,162,951

8,502,697 12,406,307 603,380 757,792 138,678 211,513 195,470 238,710 93,021 106,047 56,517 122,260 435,698 695,281 296,903 480,316 111,548 145,396 172,792 252,993 637,473 1,395,106 570,194 783,185 718,913 854,864 187,524 212,067 165,408 237,120 244,754 323,701 80,557 99,578 39,751 78,934 862,620 1,197,009 149,036 245,339 97,460 144,188 88,351 137,579 329,577 413,331 1,798,111 2,517,617

20,178,790 27,246,046 31,142,414

2010

Table 5.5  Non-financial OFDI stocks of China by region, 2007–2015 (unit: US$)

3  Non-financial OFDI stocks of China by region, 2007–2015

16,490,005 1,276,456 359,331 349,045 153,865 167,880 773,117 529,818 213,924 335,010 1,784,361 1,116,311 1,098,848 323,064 379,559 396,778 109,623 119,180 1,604,738 322,806 195,352 173,318 454,724 3,423,375

37,850,016

2013

23,543,706 2,848,870 923,379 453,094 170,579 239,148 925,619 589,730 243,138 402,167 2,548,479 1,560,997 1,537,359 451,785 426,945 487,290 133,149 201,352 1,970,097 447,530 249,444 228,305 551,500 4,947,939

50,958,051

2014

34,447,768 3,879,895 1,094,193 572,481 211,051 313,155 1,131,945 709,425 313,412 421,397 5,836,165 2,261,424 2,236,478 674,225 626,696 820,253 243,270 259,524 2,730,544 585,277 399,496 286,068 810,442 6,865,495

59,372,681

2015

Total

Including: Shenzhen Guangxi Hainan Chongqing Sichuan Guizhou Yunnan Tibet Shaanxi Gansu Qinghai Ningxia Xinjiang Xinjiang Production and Construction Corps

Region

480,619 13,780 4,423 27,674 39,758 1,866 56,996 152 19,299 59,291 492 3,729 38,419 44,416

2008

10,119,060 14,727,683

400,271 9,629 4,342 16,071 44,322 445 26,113 100 5,667 24,550 340 2,645 14,212 35,905

2007

19,976,135

473,986 30,111 11,260 30,323 53,524 2,229 94,784 152 41,518 61,085 751 3,979 51,601 44,910

2009 832,918 68,701 165,262 110,572 192,478 4,952 182,914 377 113,806 133,950 1,304 5,956 103,390 59,319

2011 1,320,198 86,688 332,820 170,951 224,573 8,746 295,805 1,033 179,387 268,562 3,149 11,934 145,444 64,589

2012

26,195,735 35,748,743 43,548,721

615,287 52,505 33,566 65,565 125,352 2,035 155,504 180 69,786 71,158 890 4,672 68,983 50,598

2010

54,340,021

1,856,799 106,168 343,423 193,959 265,593 32,708 386,567 1,227 200,287 315,985 9,062 19,624 174,951 65,279

2013

74,501,757

2,966,948 147,792 375,642 265,660 352,409 34,178 514,204 1,610 246,511 320,403 10,132 49,733 234,030 75,701

2014

93,820,449

3,868,694 184,597 489,395 390,825 465,901 42,894 602,619 31,441 285,525 321,156 22,292 160,026 296,592 84,391

2015

6 Inward and outward investment of China by industry

(I)  Foreign investment 1  FDI in 2015 by industry Table 6.1  FDI in 2015, by industry Industry

Number of enterprises

Total 26,584 Agriculture, forestry, animal 609 husbandry and fishery Mining 34 Manufacturing 4,507 Power, heat, gas and water 264 production and supply Construction 176 Transportation, warehousing 449 and postal services Information transmission, 1,311 software, and information technology services Wholesale and retail sales 9,156 Accommodation and catering 611 Finance 2,012 Real estate 387 Leasing and business services 4,465 Scientific research and 1,970 technical services Water, environment and public 84 facilities management Life services, maintenance 222 and other services Education 38 Health, social security and 51 social welfare Culture, sports and 238 entertainment

Share (%) Foreign capital Share (%) utilized (US$10,000) 100 2.29

1,355.77 15.34

100 1.13

0.13 16.95 0.99

2.43 395.43 22.50

0.18 29.17 1.66

0.66 1.69

15.59 41.86

1.15 3.09

4.93

38.36

2.83

34.44 2.30 7.57 1.46 16.80 7.41

120.23 4.34 242.79 289.95 100.50 45.29

8.87 0.32 17.91 21.39 7.41 3.34

0.32

4.33

0.32

0.83

7.22

0.52

0.14 0.19

0.29 1.43

0.02 0.11

0.90

7.89

0.58

Source: Statistics of foreign investment of Ministry of Commerce of China.

Investment of China by industry  317 2  FDI as of 2015 by industry Table 6.2  FDI as of 2015, by industry Industry

Number of enterprises

Share (%)

Contractual foreign investment (US$ million)

Share (%)

Total Agriculture, forestry, animal husbandry and fishery Mining Manufacturing Power, heat, gas and water production and supply Construction Transportation, warehousing and postal services Information transmission, software, and information technology services Wholesale and retail sales Accommodation and catering Finance Real estate Leasing and business services Scientific research and technical services Water, environment and public facilities management Life services, maintenance and other services Education Health, social security and social welfare Culture, sports and entertainment

835,965 24,094

99.99 2.88

33,369.05 782.63

99.99 2.25

2,093 510,904 4,067

0.25 61.12 0.49

168.50 18,092.39 472.78

0.49 54.22 1.36

13,336 11,280

1.60 1.35

570.19 961.57

1.71 2.88

14,305

1.71

600.47

1.80

95,380

11.41

1,794.12

5.38

8,114

0.97

226.47

0.68

4,507 52,681 55,458

0.54 6.30 6.63

837.86 5,181.38 2,071.80

2.51 15.52 6.2

19,504

2.33

765.50

2.29

1,616

0.19

208.29

0.62

13,016

1.56

381.48

1.14

1,796 1,446

0.21 0.17

34.81 76.88

0.10 0.23

2,368

0.28

141.93

0.43

Source: Statistics of foreign investment of Ministry of Commerce of China.

R S

P Q

O

N

J K L M

H I

E F G

B C D

A

Total

Agriculture, forestry, animal husbandry and fishery Mining Manufacturing Power, heat, gas and water production and supply Construction Wholesale and retail sales Transportation, warehousing and postal services Accommodation and catering Information transmission, software, and information technology services Finance Real estate Leasing and business services Scientific research and technical services Water, environment and public facilities management Life services, maintenance and other services Education Health, social security and social welfare Culture, sports and entertainment Public administration, social security and social organization

Industry 34,279

2009

2,950 29,875

73,299 651,413 265,574 7,487 27,813

36,022 613,575 206,752

582,351 1,334,309 176,603 224,097 131,349 46,807

17,183

2008

510

154

2,180 —

—

16,536

14,145

1,976 —

245 191

26,773

434

2,650,609 5,590,717 5,652,899

—

892 75

7,621

271

166,780 1,404,800 873,374 90,852 33,901 93,814 560,734 2,171,723 2,047,378 30,390 16,681 77,573

955 30,384

32,943 660,418 406,548

406,277 212,650 15,138

27,171

2007

Table 6.3  OFDI flows of China by industry, 2007–2015 (unit: US$10,000)

1  OFDI flows of China by industry, 2007–2015

(II)  Outward investment

6,881,131

18,648 —

200 3,352

32,105

7,198

862,739 161,308 3,028,070 101,886

21,820 50,612

162,826 672,878 565,545

571,486 466,417 100,643

53,398

2010

7,465,404

10,498 —

2,008 639

32,863

25,529

607,050 197,442 2,559,726 70,658

11,693 77,646

164,817 1,032,412 256,392

1,444,595 704,118 187,543

79,775

2011

8,780,353

19,634 —

10,283 538

89,040

3,357

1,007,084 201,813 2,674,080 147,850

13,663 124,014

324,536 1,304,854 298,814

1,534,380 866,741 193,534

146,138

2012

51,915 —

1,355 15,338

165,175

55,139

1,591,782 660,457 3,683,059 166,879

24,472 316,965

339,600 1,829,071 417,472

1,654,939 958,360 176,463

203,543

2014

174,751 160

6,229 8,387

159,948

136,773

2,424,553 778,656 3,625,788 334,540

72,319 682,037

373,501 1,921,785 272,682

1,125,261 1,998,629 213,507

257,208

2015

10,784,371 12,311,984 14,566,714

31,085 —

3,566 1,703

112,918

14,489

1,510,532 395,251 2,705,617 179,221

8,216 140,088

436,430 1,464,682 330,723

2,480,779 719,715 68,043

181,313

2013

Total

Agriculture, forestry, animal husbandry and fishery Mining Manufacturing Power, heat, gas and water production and supply Construction Transportation, warehousing and postal services Information transmission, software, and information technology services Wholesale and retail sales Accommodation and catering Finance Real estate Leasing and business services Scientific research and technical services Water, environment and public facilities management Life services, maintenance and other services Education Health, social security and social welfare Culture, sports and entertainment Public administration, social security and social organization —

10,733

1,749 369

71,468

106,289

13,669 166,696 3,669,388 409,814 5,458,303 198,189

1,452,002

268,070 2,985,866

2,286,840 966,188 184,676

146,762

2008

11,791,050 18,397,071

—

9,220

1,740 369

129,885

92,121

12,067 190,089 1,671,991 451,386 3,051,503 152,103

1,205,904

163,434 2,023,288

1,501,381 954,425 59,539

120,605

2007

—

13,565

2,123 610

96,137

106,508

24,329 196,724 4,599,403 534,343 7,294,900 287,413

1,663,133

341,322 3,569,499

4,057,969 1,359,155 225,561

202,844

2009

24,575,538

Note *  Indicates that data at the end of 2015 includes adjustment to historical data

S

R*

P Q*

O*

N*

H I J* K L* M

G*

E F

B C* D*

A

Industry

Table 6.4  OFDI stocks of China by industry, 2007–2015 (unit: US$ million)

2  OFDI stocks of China by industry, 2007–2015

2,526,131

805,110 4,909,363

6,699,537 2,696,443 714,056

341,664

2011

2,922,653

1,285,604 6,821,188

7,478,420 3,414,007 899,210

496,443

2012

—

54,142

6,657 1,715

161,558

240,196

—

79,351

16,479 4,676

358,124

7,056

31,721,059 42,478,067 53,194,058

—

34,583

2,394 3,616

322,974

113,343

44,986 60,386 76,327 840,624 955,324 481,971 5,525,321 6,739,329 9,645,337 726,642 898,616 958,141 9,724,605 14,229,002 17,569,795 396,712 438,838 679,276

2,318,780

617,328 4,200,645

4,466,064 1,780,166 341,068

261,208

2010

66,047,840

—

110,067

20,105 6,484

768,855

34,242

94,743 738,440 11,707,983 1,542,126 19,573,354 866,973

3,222,778

1,944,574 8,764,768

10,617,092 4,197,684 1,119,660

717,912

2013

88,264,442

—

159,522

18,464 23,060

904,271

133,365

130,704 1,232,599 13,762,485 2,464,903 32,244,391 1,087,324

3,468,163

2,258,325 10,295,680

12,372,524 5,235,194 1,504,289

969,179

2014

109,786,459

160

325,098

28,662 17,536

1,427,660

254,191

223,334 2,092,752 15,966,010 3,349,305 40,956,771 1,443,083

3,990,552

2,712,412 12,194,086

14,238,131 7,852,826 1,566,310

1,147,580

2015

Part III

Milestones

7 Investment milestones in 2015

On January 6, 2015, the third meeting of the second phase of negotiations on the China–Pakistan free trade agreement opened in Islamabad. The third meeting of the second phase of the China–Pakistan free trade agreement negotiations was successfully held in Islamabad during January 6–8, 2015. At the meeting, the two sides held consultations on various topics including the impact of the implementation of tax cuts in the first phase of the China–Pakistan Free Trade Area, the tax reduction model for trade in goods and the expansion of opening-up in the fields of services and investment in the second phase. Positive progress was made in the negotiations. The two sides also discussed the plan for the follow-up work and agreed to speed up the negotiations and conclude the second phase at an early date. The China–Pakistan Free Trade Agreement was signed in November 2006 and entered into force on July 1, 2007. Since the implementation of the agreement, bilateral trade has grown rapidly. According to the statistics issued by China Customs, bilateral trade between China and Pakistan increased from US$5.248 billion before the implementation of the agreement in 2006 to US$14.22 billion in 2013. The China–Pakistan Free Trade Agreement has played a positive role in deepening economic and trade cooperation between the two countries. On January 8, 2015, the Circular of the Ministry of Commerce, the National Bureau of Statistics and the State Administration of Foreign Exchange on Issuing the Statistical System of Outward Foreign Direct Investment was issued. In accordance with the Interim Regulations on the Management of Statistical Survey Items at Departmental Levels (Decree No. 4 of 1999 of the National Bureau of Statistics), the Ministry of Commerce, the National Bureau of Statistics and the State Administration of Foreign Exchange, in view of the actual situation and characteristics of China’s outward foreign investment in the past two years, have revised and supplemented the Statistical System of Outward Foreign Direct Investment issued in December 2012 in accordance with the relevant requirement in the Benchmark Definition of Foreign Direct Investment (fourth edition, hereinafter referred to as the “Definition”) issued by the Organisation for Economic Cooperation and Development (OECD).

324  Milestones The main amendments are as follows: I The names of statistical indicators are standardized. According to the ­Definition, among the components of OFDI, “capital stock” is renamed “equity,” “reinvestment of profit” is changed to “reinvestment of earnings,” and “other investments” is changed to “debt instruments.” II The Form for Distribution of Investments and Earnings between Domestic Investors and Overseas Enterprises is separated into the Form for OFDI Flows and Stocks (FDIN3) and the Form for OFDI Earnings (FDIN5). The relevant indicators and contents in the Form for OFDI Earnings are also amended according to the Definition. III The Annual Report Form (FDIN4) for Inter-company Debt instruments of Member Countries is added to reflect the debt instruments between domestic investors and overseas enterprises of member countries. IV The Annual Report Form for Round-trip Investments by Overseas Enterprises (FDIN7) is added to reflect the investments in Chinese enterprises in the mainland through overseas enterprises. V The Annual (FDIN10) and Monthly (FDIY6) Report Form for Outward Foreign Investments of the Cultural Industry and Related Industries in China. VI The Monthly Report Form for OFDI by types of investments (FDIY2) is added. VII The objects covered in the Form for Basic Information of Overseas Enterprises (FDIN2) is amended from all overseas enterprises to the overseas enterprises with more than 50% holding by the Chinese side. VIII The reporting period of the Forms for OFDI of the Financial Industry (FDI Finance Y1 and Y2) is amended from quarterly to monthly. IX According to the Benchmark Definition, the ways to make direct investments in the Monthly OFDI Report Form (FDIY1) is amended from “greenfield investment, purchase and equity swap” to “greenfield investment, merger and acquisition, capital extension and financial restructuring.” Meanwhile, “direct investments of domestic investors in overseas enterprises of member countries” is included in the form. The indicator of “amount of equity held by the Chinese side after merger and acquisition” is included in the Form for “Basic Matters of Merger and Acquisition in Outward Foreign Investment” (FDIY 3). X The definition of countries (regions) for statistical purposes is modified as follows: the first investment destination country (region) shall be considered the destination country (region) of OFDI in statistics. If the first destination country (region) of direct investment is the British Virgin Islands, the Cayman Islands or Bermuda, the next country (region) with investments in overseas non-shell companies (with employees and offices) shall be considered the destination country (region) of direct investments. However, if the invested companies in the British Virgin Islands, the Cayman Islands or Bermuda have non-shell subsidiaries being Chinese enterprises in the mainland, these regions shall be considered the first investment destination country (region) in statistics.

Investment milestones in 2015  325  XI A definition of subsidiary is added to the definition of statistical principles. XII The “Notes on Statistics Institutions and Statisticians and Methods of Reward and Punishment relating to Statistics” in the appendix are deleted, and the “Classification of the Cultural Industry and Related Industries” issued by the National Bureau of Statistics in 2012 is added as Appendix 5. On January 13, 2015, the Circular of the People’s Bank of China on Issues Concerning the Management of Special RMB Accounts of Foreign Banks for Settlement and Sale of Foreign Exchange was issued. In accordance with the Administrative Rules on Settlement and Sale of Foreign Exchange by Banks (Decree of the People’s Bank of China (2014) No. 2), in order to facilitate foreign banks that have not been approved to provide RMB services to handle foreign exchange settlement and sales, the People’s Bank of China has issued a circular on the management of special RMB accounts of foreign banks for settlement and sale of foreign exchange. XIII Foreign banks that have not yet been approved to provide RMB business (hereinafter referred to as foreign banks) may, upon obtaining approval from branches of the State Administration of Foreign Exchange to engage in spot settlement and sale of foreign exchange, apply to the local branch of the People’s Bank of China for opening a special RMB account for settlement and sale of foreign exchange with the approval documents, and may open a special RMB account at a local commercial bank for foreign exchange settlement and sale with the approval documents according to their business needs. XIV Where a foreign bank has opened a special RMB account for settlement and sale of foreign exchange with both the People’s Bank of China and a commercial bank, RMB funds may be transferred freely between the two accounts. The RMB special account for settlement and sale of foreign exchange at the commercial bank can be used for RMB cash deposit and withdrawal. XV The scope of revenues and expenditures of the RMB special account for settlement and sale of foreign exchange is as follows:   Revenues: RMB revenues from sale of foreign exchange capital or working capital of the bank; RMB amount transferred or RMB cash deposited into the account by customers for purchase of foreign exchange; RMB revenues from selling foreign exchange in the interbank foreign exchange market.   Expenditures: RMB amount transferred out or RMB cash drawn by customers for settlement of foreign exchange; RMB amount required for purchasing foreign exchange in the inter-bank foreign exchange market; transfer of RMB revenues from sale of the bank’s foreign exchange capital or working capital to the bank’s general RMB account.

326  Milestones XVI The RMB special account for settlement and sale of foreign exchange shall be subject to balance management. The account balance shall not exceed 20% of the registered foreign exchange capital or working capital of the bank, and the bank may, within the balance, convert between RMB and foreign currencies. XVII Foreign banks shall use the RMB special account for settlement and sale of foreign exchange in strict accordance with relevant regulations, and shall manage it separately from the bank’s daily expenditure account and other RMB accounts. XVIII Upon being approved to provide RMB service and approval of the bank’s limits of synthetic positions for settlement and sale of foreign exchange, foreign banks shall apply to the local branch of the People’s Bank in time for closing the special RMB account for ­ foreign exchange settlement and sale opened in the institution by ­presenting the approval documents of branches of the State Administration of Foreign Exchange, and the funds in the account shall be transferred to the RMB reserve account of the foreign bank with the People’s Bank of China. On January 16, 2015, the chief representatives’ meeting of the sixth round of China–Japan–ROK FTA negotiations was held in Tokyo, Japan. The chief representatives’ meeting of the sixth round of China–Japan–ROK FTA negotiations was held in Tokyo, Japan, on January 16, 2015. The three sides had talks on topics concerning the tax reduction model for trade in goods, trade in services, investment opening-up models, and the scope and areas covered by the agreement. The Chinese delegation was led by Wang Shouwen, Assistant Minister of Commerce of China. The negotiations lasted two days. The sixth round of China–Japan–ROK FTA negotiations at the departmental level was held earlier in Tokyo, Japan during November 24–28, 2014. The China–Japan–ROK FTA negotiations started in November 2012, and five rounds of negotiations had been held by that time. China, Japan and the ROK are major economies in the world. The establishment of the China–Japan–ROK Free Trade Zone not only facilitates trade and investment and closer economic exchanges among the three countries, but also plays a significant role in promoting the economic integration of East Asia and the Asia-Pacific region and the growth of the world economy. On January 19, 2015, the State Council approved the establishment of the Gui’an Integrated Bonded Zone. The People’s Government of Guizhou Province announced on January 19, 2015, that the State Council had recently approved the establishment of Gui’an Integrated Bonded Zone, the second integrated bonded area to be established in Guizhou Province. According to the letter of approval of the State Council, Gui’an Integrated Bonded Zone will cover 2.2 square kilometers, stretching from the Dongzongxian Road in the east to Kaizhang Reservoir in the west, and

Investment milestones in 2015  327 from Xinzhai Village in the south to Qianzhong Avenue in the north. Its functions and relevant tax and foreign exchange policies shall be implemented in accordance with the relevant provisions in the State Council’s reply to the establishment of Yangshan Free Trade Port Area. On January 20, 2015, the Ministry of Commerce solicited comments on the Law of the People’s Republic of China on Foreign Investment (Draft for Comments). In order to implement the guiding principles of the third and fourth plenary sessions of the 18th CPC Central Committee, in accordance with the Legislative Program of the 12th National People’s Congress Standing Committee and the Legislative Work Plan of the State Council in 2014, the Ministry of Commerce started the revision of the Joint Venture Law, the Law on Foreign-capital Enterprises and the Law on Chinese–foreign Contractual Joint Ventures, and formulated the Law of the People’s Republic of China on Foreign Investment (Draft for Comments). On January 22, 2015, the 2015 Chinese and Foreign Investment Promotion Agencies Conference was held in Beijing. In order to adapt to the new changes in the international economic situation, the new normal in domestic economic development, and the new requirements of further opening-up, sum up the investment promotion work in 2014, discuss the plan for future work, introduce innovative investment promotion ideas and ways of work, and expand and deepen practical cooperation between Chinese and foreign investment promotion agencies and enterprises, the Investment Promotion Agency of the Ministry of Commerce held the Chinese and Foreign Investment Promotion Agencies Conference in Beijing on January 22, 2015. Assistant Minister of Commerce Tong Daochi attended and addressed the conference. More than 200 persons including diplomatic envoys to China from more than 20 countries such as Australia, Cuba, Germany, the Republic of Korea, Mexico, Poland and Russia, and representatives of foreign investment promotion agencies as well as heads of provincial and municipal commerce departments, investment promotion agencies, some development zones and representatives of well-known enterprises at home and abroad attended the conference. On January 26, 2015, the first meeting of the China–Indonesia High-level Economic Dialogue was held. The first meeting of China–Indonesia High-level Economic Dialogue was held in Beijing on January 26, 2015. State Councilor Yang Jiechi of China and Coordinating Minister of Economic Affairs (deputy prime ministerial level) Sofyan Djali of Indonesia co-chaired the meeting with an aim to implement the consensus reached by the leaders of the two countries. They had an in-depth exchange of views on major cooperation topics such as the economy, trade and investment of and between the two sides.

328  Milestones On January 30, 2015, the State Council issued the Circular on Promoting the Replicable Experience from the Pilot Reform of the China (Shanghai) Pilot Free Trade Zone. The State Council issued the Circular on Promoting the Replicable Experience from the Pilot Reform of the China (Shanghai) Pilot Free Trade Zone, and made an overall arrangement for the nationwide promotion of the replicable experience from the pilot reform of the China (Shanghai) Pilot Free Trade Zone. On January 30, 2015, the third meeting of the China–Belarus Industrial Park Coordination Working Group was held in Minsk, Belarus. The third meeting of the China–Belarus Industrial Park Coordination Working Group was held in Minsk, Belarus on January 30, 2015. Assistant Minister of Commerce Zhang Xiangchen, as Chinese deputy head of the Working Group, and Belarusian Deputy Director of the President’s General Office Nickolay Snopkov co-chaired the meeting. Representatives of relevant departments and businesses of both sides attended the meeting. On February 3, 2015, the seventh meeting of the China–ASEAN Free Trade Zone Joint Committee and the Second Round of China–ASEAN FTA Upgrading Negotiations were held in Beijing. The seventh meeting of the China–ASEAN Free Trade Zone Joint Committee and the second round of China–ASEAN FTA upgrading negotiations was held in Beijing on February 3, 2015. The Chinese delegation was composed of members from the Ministry of Commerce, the Ministry of Foreign Affairs, the National Development and Reform Commission, the Ministry of Industry and Information, the Ministry of Finance, the Ministry of Agriculture, the General Administration of Customs, the General Administration of Quality Supervision, Inspection and Quarantine, China Iron and Steel Association, the People’s G ­ overnment of Guangxi Zhuang Autonomous Region and the Department of Commerce of Yunnan Province. The ASEAN delegation was composed of representatives from the 10 ASEAN countries. On February 4, 2015, the 18th Round of China–US Bilateral Investment Treaty Negotiations was launched in Washington, USA. The eighteenth round of negotiations on the China–US Bilateral Investment Treaty (BIT) was launched in Washington, USA on February 4, 2015, and lasted four days. The two sides continued to negotiate on the text of the agreement. These were the first negotiations between China and the United States in 2015. So far, the two sides had conducted eight rounds of negotiations on the text. The negotiation teams of both sides will strive to reach agreement on core issues and main clauses, and lay a solid foundation for the subsequent negative list negotiations. On February 5, 2015, the Ministry of Commerce held the National Imports and Exports Work Conference 2015 in Beijing. On February 5, 2015, the Ministry of Commerce held the National Imports and Exports Work Conference 2015 in Beijing. The main tasks of the meeting are to

Investment milestones in 2015  329 convey and implement the important instructions of the CPC Central Committee on foreign trade, implement the guiding principles of the Central Economic Work Conference and the National Commercial Work Conference, summarize the foreign trade work in 2014, analyze the current and future foreign trade situation and arrange the tasks for 2015. Minister of Commerce Gao Hucheng attended and addressed the meeting. International Trade Representative and Vice Minister of Commerce Zhong Shan made a work report. On February 25, 2015, China and the ROK completed the signing of all texts of the China–ROK Free Trade Agreement. On February 25, 2015, China and the ROK completed the signing of all texts of the China–ROK FTA and confirmed the contents of the agreement. It marked the conclusion of the China–ROK FTA negotiations. The China–ROK FTA negotiations started in May 2012. In November 2014, the heads of state of China and the ROK jointly announced the conclusion of substantive negotiations in Beijing. The China–ROK FTA involves the largest trade value and the most areas of trade so far. On February 28, 2015, the Circular of the State Administration of Foreign Exchange on Further Simplifying and Improving Policies for Foreign Exchange Administration for Direct Investment was issued. According to a news release on the website of the State Administration of Foreign Exchange on February 28, 2015, in order to further deepen the reform of foreign exchange administration for direct investment, and promote and facilitate the operations of enterprises’ cross-border investment funds, the State Administration of Foreign Exchange issued the Circular of the State Administration of Foreign Exchange on Further Simplifying and Improving Policies for Foreign Exchange Administration for Direct Investment. On March 24, 2015, the National Working Conference on Market System Development opened in Beijing. From March 24–26, 2015, the National Working Conference on Market System Development was held in Beijing. Aiming to implement the guiding principles of the third and fourth plenary sessions of the 18th CPC Central Committee, the Central Economic Work Conference and the National Commercial Work Conference, at the conference, the development of the national market system in 2014 was summarized, people exchanged experience and plans for future work were made. Assistant Minister of Commerce Wang Bingnan attended and addressed the meeting. On March 24, 2015, the sixth meeting of the China–New Zealand FTA Joint Committee was held in Wellington, New Zealand. On March 24–25, 2015, the sixth meeting of the China–New Zealand FTA Joint Committee was held in Wellington, New Zealand. The Chinese delegation was composed of personnel from the Ministry of Commerce, the Ministry of Finance, the Ministry of Agriculture, the General Administration of Customs, the Embassy of

330  Milestones China in New Zealand and the Consulate-General in Christchurch. The two sides reviewed the implementation of the FTA in fields such as trade in goods and services, the movement of natural persons and rules of origin, and agreed to launch the joint evaluation on the China–New Zealand FTA upgrading negotiations. On March 28, 2015, President Xi Jinping attended the opening ceremony of the 2015 annual conference of Boao Forum for Asia in Hainan. On March 28, President Xi Jinping attended the opening ceremony of the 2015 annual conference of Boao Forum for Asia in Boao, Hainan, and delivered a keynote speech. On March 28, 2015, Vision and Actions on Jointly Building Silk Road ­Economic Belt and 21st Century Maritime Silk Road was issued. On March 28, 2015, the National Development and Reform Commission, the Ministry of Foreign Affairs and the Ministry of Commerce jointly issued the Vision and Actions on Jointly Building Silk Road Economic Belt and 21st Century Maritime Silk Road. On March 30, 2015, the National Development and Reform Commission and the Ministry of Commerce issued the Catalogue for the Guidance of Foreign Investment Industries (revised in 2015). The Catalogue for the Guidance of Foreign Investment Industries (revised in 2015) was approved by the State Council and was scheduled to come into force on April 10, 2015. The Catalogue for the Guidance of Foreign Investment ­Industries (revised in 2011) issued by the National Development and Reform Commission and the Ministry of Commerce on December 24, 2011 was abolished at the same time. On March 31, 2015, the fourth meeting of the China–Pakistan FTA Negotiations of the second phase was launched in Beijing. From March 31 to April 1, the fourth meeting of the China–Pakistan FTA negotiations of the second phase was held in Beijing. The two sides conducted full consultations and communications on topics such as trade in goods and services, the expansion of opening-up in the investment field in the second phase of the China–Pakistan FTA. Since its inception in 2007, the China–Pakistan FTA has brought more business opportunities and convenience to enterprises of the two countries, and delivered more benefits to consumers of the two countries. The bilateral trade value maintained rapid growth, increasing from US$6.9 billion in 2007 to US$16 billion in 2014 with an annual growth of about 15.3%. On April 8, 2015, the Circular of the State Council on Issuing the Overall Plan of the China (Fujian) Pilot Free Trade Zone was issued. The Overall Plan of the China (Fujian) Pilot Free Trade Zone was approved by the State Council and issued.

Investment milestones in 2015  331 On April 21, 2015, China (Tianjin) Pilot Free Trade Zone was officially launched. At 10:00 a.m. on April 21, the China (Tianjin) Pilot Free Trade Zone was officially launched in the Tianjin Port Area under its administration. It is the first free trade zone north of the Yangtze River in China. On April 22, 2015, the Asian–African Summit was held in Jakarta. On April 22, the Asian–African Summit, which is part of the commemoration of the 60th anniversary of the Asian–African Conference in Indonesia, opened at the Jakarta Convention Center. Leaders from 34 Asian and African countries attended the summit. Indonesian President Joko Widodo, Chinese President Xi Jinping, Singapore Prime Minister Lee Hsien Loong, Japanese Prime Minister Shinzo Abe, and other leaders from Asian and African countries attended the meeting and delivered speeches. On April 24, 2015, the 16th regular vice-ministerial meeting between the Ministry of Commerce of China and the Ministry of Economy, Industry and Trade of Japan was held. On April 24, 2015, Chinese Vice Minister of Commerce Gao Yan and Vice Minister for International Affairs of Japanese Ministry of Economy, Industry and Trade (METI) Norihiko Ishiguro co-chaired the 16th regular vice-ministerial meeting between the MOFCOM and Japanese METI in Tokyo, Japan. On April 24, 2015, the first work group meeting of the joint feasibility study of the China–Georgia Free Trade Zone was held. On April 24, 2015, the first work group meeting of the joint feasibility study of the China–Georgia Free Trade Zone was held. The two sides had an in-depth exchange of views on the working mechanism and division of work for the joint feasibility study, the framework and main contents of the study report, and the next step of work of the study. In recent years, China–Georgia economic and trade cooperation has enjoyed sustainable and healthy development. In 2014, the bilateral trade volume reached US$960 million, and the non-financial direct investments from China amounted to US$530 million. China has become the third largest trading partner and the largest source of investment of Georgia. On May 5, 2015, the Ministry of Commerce held the 2015 National Foreign Investment Work Conference in Beijing. On May 5, 2015, the Ministry of Commerce held the 2015 National Foreign Investment Work Conference in Beijing. The main tasks of the meeting are to implement the guiding principles of the 18th CPC National Congress, the third and fourth plenary sessions of the 18th CPC Central Committee and the Central Economic Work Conference, study and evaluate the current trend of foreign investment utilization, and make plans for foreign investment work in 2015. Assistant Minister of Commerce Wang Shouwen attended and addressed the meeting.

332  Milestones On May 5, 2015, the Ministry of Commerce released the Report on China’s Foreign Trade (Spring 2015). The Ministry of Commerce released the Report on China’s Foreign Trade (Spring 2015) on May 5, 2015. The report reviewed China’s foreign trade performance in 2014 and in the first quarter of 2015. In 2014, China witnessed steady growth in foreign trade, with its share in the international market further improved, its status as a major trading country consolidated, its trade structure further improved, and the quality and benefits of trade increased. In the first quarter of 2015, against the backdrop of an overall decline in global trade, China’s exports maintained a momentum of growth, while imports fell significantly due to the sharp drop in import prices and the reduction in import volume of some major products. On May 8, 2015, China and Russia issued the Joint Declaration on Construction of the Silk Road Economic Belt and Construction of Eurasian Economic Union. On May 8, 2015, China and Russia jointly signed and issued the Joint Declaration on Construction of the Silk Road Economic Belt and Construction of Eurasian Economic Union, docking the Belt and Road Initiative with the Eurasian Economic Union strategy. On May 25, 2015, the Ministry of Commerce and nine other departments jointly issued the National Plan of Circulation Node Cities (2015–2020). On May 25, the Ministry of Commerce and nine other departments jointly issued the National Plan of Circulation Node Cities (2015–2020). The plan aims to speed up the construction of the national backbone circulation network and improve the functions of circulation node cities in order to give better play to the basic and guiding role of circulation and further unleash the consumption potential. In accordance with the overall regional development strategies and other strategies including the Belt and Road Initiative, the coordinated development of the Beijing–Tianjin–Hebei region and the Yangtze River Economic Belt as well as the plans for new urbanization and nationwide main functional areas, the plan determines to establish a backbone system of circulation channels consisting of three vertical and five horizontal channels throughout the country from 2015 to 2020, with clear classification of circulation node cities at the national, regional, and prefecture levels. It also includes nine key tasks, i.e., improving the infrastructure along the circulation channel, building circulation facilities for public use, promoting IT development in circulation node cities, establishing commercial logistics parks, improving the common distribution network of the cities, developing national e-commerce demonstration bases, improving the function of border node cities as ports, promoting the appropriate cluster-based development of business in cities, and strengthening the implementation and promotion of standards in the circulation field.

Investment milestones in 2015  333 On June 1, 2015, the Plan for Implementation of the Belt and Road Initiative of the Ministry of Transport (draft for review) was reviewed and adopted. Minister of Transport Yang Chuantang chaired the meeting of the Ministry of Transport to review and adopt the Plan for the Implementation of the Belt and Road Initiative of the Ministry of Transport (draft for review). On June 1, 2015, the Free Trade Agreement between the Government of the People’s Republic of China and the Government of the Republic of Korea was officially signed by governments of the two countries. Chinese Minister of Commerce Gao Hucheng and the Minister of Trade, Industry and Energy of the ROK Yoon Sang-jick, on behalf of the governments of the two countries, officially signed the Free Trade Agreement in Seoul on June 1, and jointly met with journalists after the signing ceremony. By that time, the Free Trade Agreement between China and the ROK covered the broadest range of topics and involved the biggest trade value among all free trade agreements that China had signed with other countries. It is a mutually beneficial and win-win agreement for China and the ROK. It has achieved the goal of “generally balanced, comprehensive and high-level benefits.” According to the agreement, in terms of opening-up, the liberalization level of trade in goods between the two sides exceeds 90% of all tax items and 85% of the total trade volume. The agreement covers 17 areas including trade in goods, trade in services, investment and rules, as well as “economic and trade topics in the 21st century” such as e-commerce, competition policy, government procurement, and the environment. At the same time, the two sides pledged to continue to conduct negotiations on trade in services in regard to a negative list after the signed agreement took effect and to conduct investment negotiations on the basis of pre-establishment national treatment and a negative list. On June 8, 2015, the 19th round of China–US BIT negotiations started in Beijing. From June 8–12, 2015, the 19th round of China–US BIT negotiations was held in Beijing. During this round of negotiations, the two sides exchanged negative list bids for the first time, and officially launched the negotiations on negative lists, marking a new stage of the negotiations. The China–US BIT negotiations began in 2008, and 19 rounds of negotiations had been conducted. In July 2013, both parties agreed to conduct substantive negotiations based on pre-establishment national treatment and negative lists. Both sides regard the negotiations as the most important issue in bilateral economic and trade relations, and are willing to invest all necessary resources for the negotiation with a view to reaching a win-win and high-level investment treaty. On June 8, 2015, the first China–CEEC Investment and Trade Expo was held in Ningbo, Zhejiang Province. The first China–CEEC Investment and Trade Expo jointly sponsored by the Ministry of Commerce and the People’s Government of Zhejiang Province was held in Ningbo, Zhejiang Province. This is one of the important measures to

334  Milestones implement the Belgrade Guidelines for Cooperation between China and Central and Eastern European Countries jointly issued by the leaders of China and 16 central and eastern European countries in December 2014. It is also the first comprehensive expo dedicated to investment and trade between China and Central and Eastern European countries. On June 11, 2015, a joint ministerial statement was adopted at the seventh Greater Mekong Subregion Economic Corridors Forum. The seventh Greater Mekong Subregion (GMS) Economic Corridors Forum was held in Kunming, Yunnan on June 11. The forum held in-depth talks and reached extensive consensuses on topics such as implementation of the Strategy and Action Plan for the Economic Corridors, formulation of concept plans for specific pilot projects in the Economic Corridors, setting up a platform for crossborder e-commerce cooperation, promoting cooperation in transport and trade facilitation, and enhancing the development of the subregional economic cooperation area. The Joint Statement of Ministers of the Greater Mekong Subregion Economic Corridors Forum, the Action Guideline for Strengthening the Construction of the Economic Corridors Forum Mechanism, and the Framework Document of the Platform for Cross-Border E-Commerce Cooperation were adopted at the forum. The next forum will be held in Cambodia in 2016. On June 15, 2015, the third meeting of the China–Uzbekistan Intergovernmental Cooperation Committee was held in Rizhao, Shandong Province. The third meeting of the China–Uzbekistan Intergovernmental Cooperation Committee was held in Rizhao, Shandong Province on June 15. During the meeting, China International Trade Representative and Vice Minister of Commerce Zhong Shan and Uzbekistan’s Minister of Foreign Economic Relations, Investment and Trade Elyor Ganiev jointly signed the Agreement on Expanding Mutually Beneficial Trademark and Economic Cooperation under the Framework of Silk Road Economic Belt. On June 17, 2015, the China–Australia Free Trade Agreement was officially signed. Chinese Minister of Commerce Gao Hucheng and Australian Minister of Trade and Investment Andrew Robb officially signed the Free Trade Agreement between the Government of the People’s Republic of China and the Government of Australia on behalf of their own government in Canberra, Australia, on June 17. Australian Prime Minister Tony Abbott attended the signing ceremony. The China–Australia Free Trade Agreement negotiations started in April 2005 and lasted 10 years. Through the joint efforts of both sides, during his state visit to Australia in November 2014, Chinese President Xi Jinping and Australian Prime Minister Tony Abbott jointly confirmed and announced the substantive conclusion of the negotiations. The official signing of the agreement laid foundation for the two countries to carry out their respective domestic ratification procedures and bring the agreement into force as soon as possible.

Investment milestones in 2015  335 On June 25, 2015, the China–Africa Regional Aviation Cooperation Forum was held in Beijing. On the afternoon of June 25, the China–Africa Regional Aviation Cooperation Forum, jointly sponsored by the Chinese Ministry of Commerce and the Civil Aviation Administration of China (CAAC), was held in Beijing. Vice Minister of Commerce Qian Keming, Deputy Director of CAAC Wang Zhiqing, and Vice Chairman of China Air Transport Association Li Jiangmin attended and addressed the forum. Comoros Vice Minister of Transportation and Tourism, Vice Minister of Transport, Roads and Bridges of South Sudan, Permanent Secretary of the Ministry of Transport of Tanzania and President of African Civil Aviation Commission attended the forum and delivered speeches. On June 28, 2015, Premier Li Keqiang attended the 17th China–EU Summit. At the invitation of Prime Minister Charles Michel of the Kingdom of Belgium, Prime Minister Manuel Valls of the Republic of France, and Secretary General Angel Gurria of the Organisation for Economic Co-operation and Development, Premier Li Keqiang of the State Council of China went to Brussels to attend the 17th China–EU Summit. He also made a stopover visit to Belgium and an official visit to France, and visited the headquarters of the Organisation for Economic Co-operation and Development. On June 29, 2015, the Articles of Agreement of the Asian Infrastructure Investment Bank were officially signed. On June 29, President Xi Jinping met with heads of delegations attending the signing ceremony of the Articles of Agreement of the Asian Infrastructure Investment Bank (AIIB) at the Great Hall of the People. The signing of the Articles of Agreement of AIIB marked a historic step forward toward founding the AIIB, demonstrated the solemn commitment of all parties concerned, and embodied the practical actions of all parties concerned in the spirit of unity and cooperation, openness and inclusiveness, and common development. On June 29, 2015, China and Europe organized activities to commemorate the 10th anniversary of China–EU Cooperation Dialogue on Intellectual Property Rights. On June 29, during the 17th China–EU Summit, commemorative activities were held for the 10th anniversary of the China–EU Intellectual Property Dialogue Mechanism in Brussels. Chinese Assistant Minister of Commerce Tong Daochi, on behalf of Minister of Commerce Gao Hucheng, attended the meeting and made a speech, together with the Trade Commissioner Cecilia Malmström of the European Commission. Both sides decided to upgrade the China–EU Intellectual Property Dialogue Mechanism to the vice-ministerial level. On July 8, 2015, President Xi Jinping visited Ufa, Russia, to attend the seventh BRICS Summit, July 8–9, and the 15th meeting of the Council

336  Milestones of Heads of State of the Shanghai Cooperation Organization (SCO) on July 9–10. At the invitation of President Vladimir Putin of the Russian Federation, President Xi Jinping went to Ufa, Russia, to attend the seventh BRICS Summit and the 15th meeting of the Council of Heads of State of the SCO on July 9 and 10. On August 3, 2015, the fifth meeting of the second phase of China–Pakistan FTA negotiations was held in Islamabad During August 3–5, the fifth meeting of the second phase of China–Pakistan FTA negotiations was held in Islamabad, the capital of Pakistan. The two sides had talks on topics concerning the tax reduction models for trade in goods during the second phase, further expanding trade in services, cooperation on customs data exchange and inspection and quarantine measures for some products imported from Pakistan. Positive progress was made in the negotiations. On August 23, 2015, the 14th China–ASEAN (10 + 1) Economic and Trade Ministers’ Meeting was held in Kuala Lumpur, Malaysia On the morning of August 23, the 14th China–ASEAN (10 + 1) Economic and Trade Ministers’ Meeting was held in Kuala Lumpur, capital of Malaysia. Gao Hucheng, Minister of Commerce of China, led a delegation to attend the meeting, emphasizing that in accordance with the principle of “extensive consultation, joint contribution and shared benefits,” China is willing to cooperate with ASEAN countries to continue to promote the construction of the 21st-century Maritime Silk Road, strengthen connectivity and cooperation, build a closer community with a shared future, implement the consensus of the leaders, and complete the upgrading of China–ASEAN FTA negotiations on schedule. On August 25, 2015, a memorandum of understanding was signed for cooperation between China provinces and the state of Michigan, USA. On August 25, China International Trade Representative and Vice Minister of Commerce Zhong Shan met with Governor Rick Snyder of Michigan, USA, in Beijing and the two signed the Memorandum of Understanding of Trade and Investment Joint Working Group between China Provinces and US Michigan. On August 31, 2015, China and Laos signed the Joint General Scheme of the Mohan–Boten Economic Cooperation Zone. On August 31, 2015, in the presence of Chinese President Xi Jinping and Laotian President Choummaly Sayasone, Chinese Minister of Commerce Gao Hucheng and Laotian Deputy Prime Minister Somsavat Lengsavad officially signed the Joint General Scheme of the Mohan–Boten Economic Cooperation Zone on behalf of the two governments. On September 8, 2015, China and the Maldives signed the Memorandum of Understanding on Launching FTA Negotiation. The second meeting of the China–Maldives Joint Committee of Economy and Trade was held on September 8 in Kuramba, Maldives. After the meeting, the

Investment milestones in 2015  337 two sides signed the Memorandum of Understanding on Launching China–Maldives FTA Negotiations. The meeting was co-chaired by Chinese Vice Minister of Commerce Gao Yan and Maldivian Minister of Economic Development Mohammed Saeed. The two sides had an in-depth exchange of views and reached extensive consensuses on expanding bilateral trade and investment cooperation, launching China–Maldives FTA negotiations, strengthening infrastructure construction cooperation and promoting human resources cooperation. On September 11, 2015, the Summer Davos World Economic Forum concluded in Dalian. During September 9–11, the Summer Davos Forum 2015 was held in Dalian, Liaoning Province. The Summer Davos, which is short for the Annual Meeting of the New Champions, mainly serves companies ranking 501 to 1,000 in the world. In other words, it features dialogues between Fortune Global 500 enterprises and growth-oriented enterprises with the greatest potential for development and between governments of countries and regions. The theme of Summer Davos 2015 was “charting a new course for growth.” The event attracted more than 1,700 elites from more than 90 countries, including more than 900 business leaders, 40 technological pioneers, 150 leading scholars, 120 young leaders and outstanding young people, 45 young scientists and 60 social entrepreneurs from around the world. On September 18, 2015, the 12th China–ASEAN Expo was successfully held in Nanning, Guangxi. The 12th China–ASEAN Expo was successfully held in Nanning, Guangxi during September 18–21. According to statistics from relevant departments, during the 2015 China–ASEAN Expo and the China–ASEAN Business and Investment Summit, the exhibitors from various countries applied for 5,563 booths, 21% more than what was planned. Up to 2,207 exhibitors participated in the expo, setting up a total of 4,600 booths. Among them, 1,296 booths were for exhibitors from the 10 ASEAN countries and countries beyond the China–ASEAN FTA, accounting for 38.1% of the total. The expo and the summit attracted 65,000 exhibitors and 85 buying missions. The number of participants exceeded 520,000. On September 22, 2015, the Seminar on Economic and Trade Cooperation between Chinese Provinces and the U.S. States was held in Seattle. On September 22, during President Xi Jinping’s state visit to the United States, the Chinese Ministry of Commerce and the government of Washington State of the U.S. co-hosted the Seminar on Economic and Trade Cooperation between Chinese Provinces and the U.S. States and the Establishment Ceremony of the Joint Work Group of Trade and Investment Cooperation between Chinese P ­ rovinces and the Washington State. China Deputy International Trade Representative Zhang Xiangchen of the Ministry of Commerce and the Lieutenant Governor Brad Owen of the Washington State attended the opening ceremony and delivered speeches.

338  Milestones On September 25, 2015, China and the United States signed the Memorandum of Understanding on Development Cooperation. On September 25, during President Xi Jinping’s state visit to the United States, Chinese Minister of Commerce Gao Hucheng and head of the United States Agency for International Development Alfonso Lenhardt signed the Memorandum of Understanding between the Chinese Ministry of Commerce and the United States Agency for International Development on Development Cooperation and Establishing Communication Mechanism in Washington. This raised the level of communication and cooperation between the two countries in the field of international development and enriched the connotation of China– U.S. bilateral relations. On September 25, 2018, the SCO Countries Trade & Investment Promotion Conference 2015 was held in Xi’an. On the morning of September 25, 2015, the SCO Countries Trade & Investment Promotion Conference 2015, co-sponsored by the Ministry of Commerce and the Shaanxi provincial government, was held in Xi’an. Vice Governor of Shaanxi Province Wang Lixia attended and addressed the conference. More than 200 guests and business representatives from SCO member states, observer countries and dialogue partners attended the conference and made presentations. On September 25, 2015, the China Western International E-Commerce Conference was held in Xi’an. On September 25, the China Western International E-Commerce Conference, a sub-forum of the Euro–Asia Economic Forum, was held at Xi’an International Trade & Logistic Park. More than 300 guests, including officials from relevant departments, representatives of excellent domestic and foreign e-commerce enterprises, experts from the industry and scholars relating to the e-commerce industry gathered in the inland port city of China to discuss the “new opportunities for e-commerce in the west.” On the same day at the meeting, agreements on nine major projects were signed, including a strategic cooperation agreement between JD Group and the municipal government of Xi’an to jointly promote the development of e-commerce in Xi’an. On September 26, 2015, President Xi Jinping attended the United Nations Sustainable Development Summit at the United Nations headquarters in New York. On September 26, President Xi Jinping attended the United Nations Sustainable Development Summit at the United Nations headquarters in New York and delivered a speech entitled “Towards a Mutually Beneficial Partnership for ­Sustainable Development.” He also attended a series of events marking the 70th anniversary of the founding of the United Nations in New York, where he proposed to “make China’s voice heard and to pursue common progress and sustainable development of mankind.”

Investment milestones in 2015  339 On September 26, 2015, the Euro–Asia Economic Forum concluded. On 26 September, 2015, the Euro–Asia Economic Forum 2015, which attracted a lot of attention, was concluded in Xi’an after completing its agenda. The forum attracted 2,180 participants from the political, business and academic circles of 53 countries and regions to its 56 meetings and activities in 28 areas and reached important consensuses. The forum led to the launch of the Belt and Road Science and Technology Park strategy, promoting and leading to the signing of contracts for a number of major projects. In particular, the SCO Countries Commodity Exhibition attracted wide attention. On September 28, 2015, the fifth China–EU High-level Economic and Trade Dialogue was held in Beijing. On September 28, Chinese Vice Premier Ma Kai and Vice President of the European Commission Jyrki Katainen co-chaired the fifth China–EU High-level Economic and Trade Dialogue in Beijing. Ma Kai and Jyrki Katainen jointly attended the signing ceremony of relevant documents and the joint press conference. On October 16, 2015, the second phase of China–Pakistan FTA negotiations was held in Beijing. During October 14–16, the second phase of China–Pakistan FTA negotiations was held in Beijing. The two sides had talks on the model of tax reduction for trade in goods, expanding trade in services, Pakistan’s regulation tax, direct transportation from the origin country and the cooperation on exchange of customs data, and other topics. On October 21, 2015, China and the UK signed two memorandums of understanding on local trade and investment cooperation and development cooperation. On October 21, 2015, in the presence of President Xi Jinping and British Prime Minister David Cameron, Chinese Minister of Commerce Gao Hucheng and British Secretary of State for Business, Innovation and Skills Sajid Javid and British Secretary of State for International Development Justine Greening signed the Memorandum of Understanding between Chinese Ministry of Commerce and Department of Business, Innovation and Skills of the United Kingdom of Great Britain and Northern Ireland on Strengthening Bilateral Local Trade and Investment Cooperation and the Memorandum of Understanding between Chinese Ministry of Commerce and Department of International Development of the United Kingdom of Great Britain and Northern Ireland for a Partnership to Enhance Development Cooperation and Achievement of the Goals of Sustainable Development. The former of the two was the first MOU signed between China and an EU country to strengthen economic and trade cooperation on the local level. On November 5, 2015, the Ministry of Commerce issued the Report on China’s Foreign Trade (Autumn 2015). On November 5, 2015, the Ministry of Commerce issued the Report on China’s Foreign Trade (Autumn 2015) (hereinafter referred to as the Report). The Report

340  Milestones reviews the performance of China’s foreign trade in the first three quarters of 2015, and forecasts the development trend of China’s foreign trade for the rest of 2015 and the coming 2016. On November 7, 2015, China and Singapore officially launched the third intergovernmental cooperation project. On November 7, 2015, during President Xi Jinping’s visit to Singapore, leaders of the two countries announced the official launch of the third China–Singapore intergovernmental cooperation project, targeted at western China. Chinese State Councilor Yang Jiechi, Singaporean Deputy Prime Minister Teo Chee Hean, Chinese Minister of Commerce Gao Hucheng and Singaporean Minister in the Prime Minister’s Office Chan Chun Sing signed the framework agreement and supplementary agreement on the construction of the project on behalf of the two governments. The launch of the project is one of the important achievements of President Xi Jinping’s visit to Singapore. On November 10, 2015, the 18th meeting of the China–Russia Sub-Committee of Economic and Trade Cooperation was held in Beijing. On November 10, 2015, the 18th meeting of the China–Russia Sub-Committee of Economic and Trade Cooperation was held in Beijing. Chinese Minister of Commerce Gao Hucheng and Russian Minister of Economic Development Alexey Ulyukayev co-chaired the meeting. The two sides agreed to take joint measures to develop bilateral trade, expand market access, deepen cooperation on the local level, strengthen multilateral and regional cooperation, and promote the steady development of bilateral economic and trade relations. On November 12, 2015, the fifth Meeting of the Joint Cooperation Committee on the Long-term Plan for the China–Pakistan Economic Corridor was held. The fifth meeting of the Joint Cooperation Committee on the Long-term Plan for the China–Pakistan Economic Corridor was held in Karachi, Pakistan on November 12, 2015. The meeting focused on further implementing the outcome of President Xi Jinping’s visit to Pakistan in April 2015 to push ahead with the construction of China–Pakistan Economic Corridor. The meeting was co-chaired by chairmen of the Joint Committee from both sides, namely Vice Chairman Wang Xiaotao of China’s National Development and Reform Commission and Pakistani Minister of Planning and Development Ahsan Iqbal Choudhury. About 100 people from government departments, financial institutions and enterprises of both countries attended the meeting. On November 16, 2015, President Xi Jinping attended the 10th G20 Summit in Antalya, Turkey. During November 14–16, 2015, President Xi Jinping went to Antalya, Turkey, for the 10th G20 Summit.

Investment milestones in 2015  341 On November 16, 2015, the 27th APEC Ministerial Meeting was held in Manila, Philippines. On November 16 and 17, 2015, the 27th APEC Ministerial Meeting was held in Manila, Philippines. On behalf of Chinese Minister of Commerce Gao Hucheng, Vice Minister of Commerce Wang Shouwen attended the meeting and made a keynote speech on “Boosting Regional Economic Integration and Promoting Inclusive Growth.” On November 17, 2015, the seventh meeting of the China–Tajikistan Intergovernmental Committee on Economic and Trade Cooperation was held in Beijing. On November 17, the seventh meeting of the China–Tajikistan Intergovernmental Committee on Economic and Trade Cooperation was held in Beijing. China International Trade Representative and Vice Minister of Commerce Zhong Shan and Tajikistan’s Minister for Economic Development and Trade Nematullo Khikmatullozoda co-chaired the meeting. On November 22, 2015, a series of cooperation activities such as the China– US Entrepreneur Roundtable, Provincial-State and Inter-city Economic and Trade Cooperation Meeting, Seminar on Health Care Cooperation and Seminar on Agriculture and Food Cooperation were held in Guangzhou. On November 22, a series of cooperative activities were held in Guangzhou, such as the China–US Entrepreneur Roundtable, Province-State and City-to-City Economic and Trade Cooperation Meeting, Seminar on Health Care Cooperation and Seminar on Agriculture and Food Cooperation. Chinese Vice Premier Wang Yang and U.S. Secretary of Commerce Penny Pritzker, U.S. Trade Representative Michael Froman, U.S. Secretary of Agriculture Thomas Vilsack, etc., attended the activities. On November 22, 2015, Chinese Premier Li Keqiang attended the release of a joint statement of leaders on the Regional Comprehensive Economic Partnership Agreement. Chinese Premier Li Keqiang attended the release of a joint statement of leaders on the Regional Comprehensive Economic Partnership Agreement (RCEP) at Kuala Lumpur International Convention Center on the morning of November 22. Leaders of the 10 ASEAN countries, the Republic of Korea, Japan, Australia, New Zealand and India attended the meeting. Malaysian Prime Minister Najib Razak introduced the content of the statement. On November 22, 2015, China and the ASEAN concluded negotiations on upgrading the Free Trade Agreement and signed the Protocol on Upgrading. On November 22, in the presence of Chinese Premier Li Keqiang and heads of state of the 10 ASEAN countries, Chinese Minister of Commerce Gao Hucheng and his counterparts from the 10 ASEAN countries signed the Protocol to Amend the Framework Agreement on Comprehensive Economic Cooperation

342  Milestones and Some of the Related Agreements between the People’s Republic of China and the Association of Southeast Asian Nations in Kuala Lumpur, Malaysia. On November 23, 2015, the 26th meeting of China–US Joint Commission on Commerce and Trade was successfully concluded. During November 21–23, the 26th meeting of China–US Joint Commission on Commerce and Trade, co-chaired by Chinese Vice Premier Wang Yang, U.S. Secretary of Commerce Penny Pritzker and U.S. Trade Representative Michael Froman, was held in Guangzhou. On November 24, 2015, the fourth Summit of Heads of Government of China and CEEC was held in Suzhou. On November 24 and 25, Premier Li Keqiang attended the fourth Summit of Heads of Government of China and CEEC and delivered a speech. On November 24, 2015, the fifth China–CEEC Economic and Trade Forum was held in Suzhou. On November 24, 2015, during the Summit of Heads of Government of China and CEEC, the fifth China–CEEC Economic and Trade Forum hosted by Chinese Ministry of Commerce was held in Suzhou as an important part of the Summit. Held in China for the first time, the forum was themed on “new beginning, new domains, new vision.” Premier Li Keqiang attended the opening ceremony and made a keynote speech. On November 25, 2015, the 23rd round of China–US BIT negotiations was held in Washington, USA. From November 22–25, 2015, the 23rd round of negotiations on the China–US BIT was held in Washington, DC, USA. Both sides agreed to continue to implement the important consensuses reached by the leaders of the two countries at the negotiations and promote progress in the talks. On November 26, 2015, President Xi Jinping met with the leaders of 16 central and eastern European countries who came to China to attend the Fourth Summit of Heads of Government of China and CEEC. Chinese President Xi Jinping met with the leaders of 16 central and eastern ­European countries who came to China for the fourth Summit of Head of Governments of China and CEEC at the Great Hall of the People on November 26, 2015. On November 29, 2015, the first meeting of the organizing committee of the Silk Road (Dunhuang) International Cultural Expo was held at the Great Hall of the People in Beijing. On the morning of November 29, the first meeting of the organizing committee of the Silk Road (Dunhuang) International Cultural Expo was held at the Great Hall of the People in Beijing. It was announced that the first Expo would be held in Dunhuang City, Gansu Province, in 2016. The organization, staffing, work

Investment milestones in 2015  343 procedures and programs of activities of the organizing committee were deliberated and approved at the meeting, and it was decided that preparatory work would soon begin. Chinese Minister of Culture Luo Shugang presided over the meeting. On November 29, 2015, the ninth China–Japan Energy Conservation and Environmental Protection General Discussion Forum was held in Tokyo. On November 29, Chinese Vice Minister of Commerce Gao Yan attended the ninth China–Japan Energy Conservation and Environmental Protection General Discussion Forum in Tokyo, Japan, and made a keynote speech. On November 30, 2015, the first meeting of the China–ROK Industrial Park Cooperation Mechanism was held in Seoul. On November 30, the first meeting of China–ROK Industrial Park Cooperation Mechanism was held in Seoul, the Republic of Korea. Chinese Vice Minister of Commerce Gao Yan co-chaired the meeting together with ROK’s Vice Minister of Trade, Industry and Energy. Representatives from relevant government departments such as the Department of Commerce of Shandong Province, the Department of Commerce of Jiangsu Province, the Municipal People’s Government of Yantai, the Municipal People’s Government of Yancheng, Saemangeum Development Agency of South Korea and the Korean Ministry of Land and Transportation attended the meeting. On November 30, 2015, the eighth round of China–EU Bilateral Investment Treaty negotiations was held in Brussels, Belgium. On November 30, the eighth round of negotiations on China–EU Bilateral Investment Treaty was held in Brussels, Belgium. It lasted five days. The two sides strived to meet the goal of “reaching consensus on the scope of agreement by the end of 2015 and forming a text for negotiation” set by the leaders of both sides. On December 3, 2015, the BOC OBOR RMB index was launched. On December 3, while Renminbi was added to the IMF Special Drawing Rights (SDR) basket, the Bank of China launched the BOC OBOR RMB index and sub-indices. It is the first composite index in the global financial market to track the change of effective exchange rate of RMB against currencies of BRI countries and regions. On December 3, 2015, the sixth Ministerial Conference of the Forum of China–Africa Cooperation was held in Pretoria, South Africa. On December 3, the sixth Ministerial Conference of the Forum of China–Africa Cooperation was held in Pretoria, South Africa. Chinese Minister of Commerce Gao Hucheng attended the meeting and made a speech, stressing that China’s new economic and trade measures announced at the fifth Ministerial Conference of the Forum had been fully implemented as scheduled, and the new measures that

344  Milestones would be announced by President Xi Jinping to strengthen practical cooperation between China and Africa over the next three years would be worth the wait. On December 10, 2015, China and Georgia officially launched FTA negotiations. China and Georgia officially began negotiations on a free trade agreement on December 10. Following the seventh meeting of the China–Georgia Intergovernmental Economic and Trade Cooperation Commission, China International Trade Representative and Vice Minister of Commerce Zhong Shan and the Minister of Economy and Sustainable Development of Georgia Dimitri Kumsishvili signed the Memorandum of Understanding between the Ministry of Commerce of the People’s Republic of China and the Ministry of Economic Affairs and Sustainable Development of Georgia on Launching China–Georgia Free Trade Agreement Negotiations, officially launching China–Georgia FTA negotiations. On December 15, 2015, China joined the European Bank for Reconstruction and Development, which will greatly facilitate the coordination between the Belt and Road Initiative and European investment plans. On December 15, the Council of the European Bank for Reconstruction and Development (EBRD) approved a resolution to accept China as its member. China will officially become a member of the bank after completing legal ­procedures at home. Founded in 1991, the London-based EBRD is one of the most important development financial institutions in Europe. On December 15, 2015, the 10th WTO Ministerial Conference was held in Nairobi, Kenya. During December 15–19, 2015, the 10th WTO Ministerial Conference was held in Nairobi, Kenya. Chinese Minister of Commerce Gao Hucheng led the Chinese delegation to the event. The Chinese delegation included people from the Ministry of Commerce, the Ministry of Foreign Affairs, the National Development and Reform Commission, the Ministry of Finance, the Ministry of Agriculture, the General Administration of Customs, the Export-Import Bank of China and China’s Permanent Delegation to the WTO. On December 27, 2015, the National Commercial Work Conference was held in Beijing. On December 27, 2015, the National Commercial Work Conference was held in Beijing. The main tasks of the meeting included: fully implementing the guiding principles of the 18th CPC National Congress, the third, fourth and fifth plenary sessions of the 18th CPC National Congress and the Central Economic Work Conference, summarizing the commercial work since the 12th Five-Year Plan period, and especially since the 18th CPC National Congress, analyzing in depth the domestic and global situations, studying and deploying the work in 2016, and clarifying the overall idea for business development in the 13th Five-Year Plan period. Gao Hucheng, Secretary of the Party Leadership Group and Minister of Commerce, made a work report.

Index

Page numbers in bold denote tables, those in italics denote figures. Administrative Rules on Settlement and Sale of Foreign Exchange 325 Africa: China’s investment stock in 35–6 agriculture: foreign investment in China 13, 14 AIIB see Asian Infrastructure Investment Bank (AIIB) Anhui: cooperation with countries 167–8; development in cross-border M&A 167; enterprises and projects 169–70; financial services 172; foreign investment in manufacturing industry 166; foreign investment in Wanjiang demonstration area 166; foreign investment projects 166–7; foreign investment utilization 166; growth in investment from America and Europe 166; in-depth international capacity cooperation 170–1; investment in and from BRI countries 169–73; inward and outward investment of 166–9; opening-up platforms construction 171; overseas investment 167–8; overseas risk prevention and control 172; policies to promote inward and outward investment 165; projects construction 170; promoting cooperation in field of humanities 171; promotion of international capacity cooperation 167; prospects for 2016 168–9; prospects for cooperation 170–3; service system improvement 172; strategic interaction with Yangtze River Economic Belt 172–3 APEC Ministerial Meeting 341 ASEAN countries: China’s investment in major economies 47–9, 50

Asian–African Summit 331 Asian Infrastructure Investment Bank (AIIB) 81 Australia, China’s investment in major economies 51–3, 53 Bangladesh–China–India–Myanmar (BCIM) Economic Corridor 157, 218, 220 Beijing: foreign capital utilization 66–7, 69; growth of inward and outward investment 66–8; guidance and services for outward investment to build enterprises’ capacity 64–6; investment in and from BRI countries in 2015 69–70; outward investment 69; overseas investment 67–8; policies to promote inward and outward investment 63–6; problems of inward and outward investment 68; prospects for 2016 68–9; service sector to promote trade in services 63–4 Beijing–Tianjin–Hebei Region 74, 75 Belt and Road Initiative (BRI) 63 BOC OBOR RMB index 343 BRI see Belt and Road Initiative (BRI) BRI countries: China’s OFDI in (2015) 308–9; city’s investment in 69; investment in 76; investment in China 10; prospect for investment in and from (2016) 69–70; scale and structure of Beijing’s investment in 69 British Virgin Islands (BVI) 67; foreign direct investment 7 CAAC see Civil Aviation Administration of China (CAAC) Cameron, David 339

346  Index Catalogue for the Guidance of Foreign Investment Industries 330 Cayman Islands, foreign direct investment 10 Central and Eastern European countries (CEECs) 105; encouraging counties/ cities to build 106–7; financial support for cooperation in 106–7; subsidies for industrial park development in 105; supporting enterprises investment and cooperation in 105; supporting enterprises to participate in investment 105–6; supporting the investment by 106 chemical manufacturing industry: foreign investment in China 14, 15, 61n2 China–Africa Cooperation 343–4 China–Africa Regional Aviation Cooperation Forum 335 China–ASEAN (10 + 1) Economic and Trade Ministers’ Meeting 336 China–ASEAN Expo 337 China–ASEAN Free Trade Zone 193 China–ASEAN Free Trade Zone Joint Committee 328 China–ASEAN Investment Cooperation Fund 219 China–Australia Free Trade Agreement 334 China–Belarus Industrial Park Coordination Working Group 328 China–CEEC Economic and Trade Forum 342 China–CEEC Investment and Trade Expo 333–4 China–EU Bilateral Investment Treaty negotiations 343 China–EU High-level Economic and Trade Dialogue 339 China–EU Summit 335 China Export & Credit Insurance Corporation 72 China–France Chengdu Ecological Park 200 China–Georgia Free Trade Zone 331 China–Georgia Intergovernmental Economic and Trade Cooperation Commission 344 China–Germany Innovation Industry Cooperation Platform 200 China–Hungary BorsodChem Economic and Trade Cooperation Zone 140 China–Indochina Peninsula International Economic Corridor 218 China–Indonesia High-level Economic Dialogue 327

China–Japan Energy Conservation and Environmental Protection General Discussion Forum 343 China–Japan–ROK FTA negotiations 326 China–Maldives Joint Committee of Economy and Trade 336–7 China–Mongolia–Russia Economic Corridor 69, 265 China net capital exporter: OFDI surpasses FDI to make 25–6, 26 China–New Zealand FTA Joint Committee 329–30 China Ningbo International Investment Cooperation Co., Ltd. (CNIC) 115 China–Pakistan Economic Corridor 340 China–Pakistan Free Trade Agreement (2015) 323 China–Pakistan FTA negotiations 330, 336, 339 China–ROK Free Trade Agreement 329 China–ROK Free Trade Zone 136 China–ROK Industrial Park Cooperation Mechanism 343 China–ROK Innovation & Entrepreneurship Park 200 China–Russia Sub-Committee of Economic and Trade Cooperation 340 China’s Foreign Trade 332, 339–40 China–Singapore intergovernmental cooperation project 340 China’s investment in major economies 43–54, 44; ASEAN countries 47–9, 50; Australia 51–3, 53; European Union 45–7, 48; Hong Kong SAR 44–5, 46; Russia 53–4, 54; United States 50–1, 52 China’s investment stock: Africa 35–6; in developed countries (regions) at the end of 2015 37; in economies in transition 6n18, 36–7; Europe 35; Latin America 35; Oceania 36 China’s OFDI: in BRI countries/regions in 2015 308–9; global distribution of (2015) 311 China’s OFDI flows 2015: active M&A, specific fields, and rapid expansion 27, 28; composition of 29, 29; by country/ region 2007–2015 292–9; coverage of wide range of industries 29–30, 31, 31; equity investment 27, 29, 29; high concentration and rapid investment growth in BRI countries 32–3; OFDI surpasses FDI to make China net capital exporter 25–6, 26; rapid growth in industries 29–30, 31, 31; rapid growth to

Index  347 second place in world 25, 26; rapid increase in investment in Asia & America 30, 32, 32; sub-national investment 33, 33–4, 34 China’s OFDI stock: Asia received 70% of China’s OFDI 35–8, 37, 37, 38; China ranked higher with larger share of OFDI 34, 34, 35; by country/region 2007–2015 300–7; state-owned and non-state-owned enterprises 42, 42, 43, 44; subnational investment 42, 43, 44; wide distribution across industries 38–41, 40, 41 China’s State Council 70, 71, 74 China–Tajikistan Intergovernmental Committee 341 China–US Bilateral Investment Treaty Negotiations 328 China–US BIT negotiations 333, 342 China–US Entrepreneur Roundtable 341 China–US Joint Commission 342 China–Uzbekistan Intergovernmental Cooperation Committee 334 China Western International E-Commerce Conference (2015) 338 Chinese and foreign cultural enterprises 63 Chinese and Foreign Investment Promotion Agencies Conference (2015) 327 Chinese investors 55, 55–6, 56, 56, 57 Chongqing: foreign investment utilization 201–2; growth in total inward and outward investment 201; investment in and from BRI countries in 2015 204; low stability 203; overseas investment 202; policies to promote inward and outward investment 201; structure of inward and outward investment 201–2; trends and prospects for 2016 203–4 Circular of the People’s Bank of China on Issues 325 Civil Aviation Administration of China (CAAC) 335 communications equipment: computers and electronic equipment 18, 19, 61n6 Dalian 253; development trends and prospects for 2016 255–7; foreign capital utilization 253–4; inward and outward investment in 2015 253–5; overseas investment 254–5 EBRD see European Bank for Reconstruction and Development (EBRD) Economic and Trade Cooperation 337, 341

economic globalization 63 equity investment 27, 29, 29 Euro–Asia Economic Forum 338, 339 Europe: China’s investment in major economies 45–7, 48; China’s investment stock in 35 European Bank for Reconstruction and Development (EBRD) 344 FDI see foreign direct investment (FDI) finance: foreign investment in China 22–3, 23, 62n12 food processing industry: foreign investment in China 13–14, 14 foreign capital utilization: Beijing 66–7, 69; Dalian 253–4; FDI in China by some countries/regions 2015 288–91; Fujian 118–20; Gansu 228–9; Guangxi 187–9; Guizhou 205–9; Hainan 131; Heilongjiang 262–3; Hunan 179–82, 184–5; Jiangsu 92–5; Jiangxi 175–7; Jilin 258; Liaoning 250–1; Qinghai 230–1; Sichuan 195–7; Tibet 221–2; Xiamen 126–7; Xinjiang 233, 234; Zhejiang 100–2 foreign direct investment (FDI): 1979–2015; by type of investment 4, 4; in 2015; by investor type 3, 3; British Virgin Islands (BVI) 7; Cayman Islands 10; flows by region and economy 2010–2015 272–81; fluctuations in global 3; foreign capital utilization 212–13, 216–17; foreign investment utilization 215–16; Germany 9; growth in inward and outward investment 212–13; Hong Kong SAR 6–7; investment in BRI countries 217–18; Japan 8; overseas investment 213, 216–17; policies to promote inward and outward investment 212; problems in inward and outward investment 215–16; prospects for 2016 218–20; Republic of Korea 8; Samoa 9; Singapore 7–8; stocks by region and economy 2000 2010 and 2015 282–7; structure of inward and outward investment 213–15; Taiwan 10; trends and prospects for 2016 216–17; United States 8–9 Foreign Exchange Administration for Direct Investment 329 foreign-funded R&D institutions 80 foreign-invested enterprises 3, 61n8; tax revenue from 4

348  Index foreign investment: FDI as of 2015 by industry 317; FDI as of 2015; by region 310; FDI in 2015 by industry 316; FDI in 2015; by region 310 foreign investment, Anhui: in manufacturing industry 166; projects 166–7; utilization 166; in Wanjiang demonstration area 166 foreign investment in China 3–4; agriculture 13, 14; British Virgin Islands (BVI) 7; Cayman Islands 10; chemical manufacturing industry 14, 15, 61n2; destination regions 10–11, 11, 12; finance 22–3, 23, 61n12; food processing industry 13–14, 15; general-purpose equipment manufacturing industry 16, 16, 61n3; Germany 9; health, social security and social welfare 22, 22, 62n11; Hong Kong SAR 6–7; investment of BRI countries in China 10; investment sources 4–5, 6, 7; Japan 8; leasing and business services industry 18–19, 20, 61n7; manufacturing of communications equipment, computers and electronic equipment 18, 19, 61n6; recipient industries 11–23, 12–13; Republic of Korea 8; Samoa 9; Singapore 7–8; special-purpose equipment manufacturing industry 16–17, 17, 61n4; Taiwan 10; transportation equipment manufacturing 17, 18, 61n5; transportation, warehousing and postal services 20, 21, 62n10; United States 8–9; wholesale and retail sales industry 19–20, 21, 62n9 foreign investment management: Guizhou 209; Jilin 260; Qingdao 146; Shenzhen 154 foreign investment structure: Guizhou 208; Qingdao 145–6 foreign investment utilization: Anhui 166; Chongqing 201–2; Qingdao 145–7; Shenzhen 150, 153–4; Sichuan 197–8 foreign-related tax revenue (1992–2015) 5 free trade account system 79 Free Trade Agreement 333 Froman, Michael 341 Fujian: efforts for investment promotion 116–17; foreign aid training programs 122; foreign capital utilization 118–20; growth of inward and outward investment 118; innovation-driven

development of processing trade 117–18; innovation in investment attraction mechanisms 116; international capacity cooperation 121–2; investment in BRI countries 121; investment of BRI countries in 121; overseas investment improvement 116; policies promote inward and outward investment 116–18; prospect for investment in and from BRI countries in 2016 121–3; prospects for 2016 119–21; service promotion system 122–3; structure of inward and outward investment 118–19; sustainable and healthy development 120–1; trade growth 122 fund management models 79 Gansu 228; foreign capital utilization 228–9; foreign debt management 228–9; foreign direct investment 229; overseas investment 229–30 Gao Hucheng 333, 334, 339, 344 Gao Yan 343 general-purpose equipment manufacturing industry: foreign investment in China 16, 16, 61n3 Germany: foreign direct investment 9 global outward investment: Singapore 7 Greater Mekong Sub-regional Economic Cooperation 218 Greater Mekong Subregion (GMS) Economic Corridors Forum 334 growth of inward and outward investment: Beijing 66–8; Fujian 118; Ningbo 107–8; Ningxia 245–6; Xinjiang 234; Xinjiang Production and Construction Corps (XPCC) 241–2 Guangxi: foreign capital utilization 187–9; outward investment 191; overseas investment of 191–4; overseas project contracting 191; problems in utilization of foreign capital 189; work plan for 2016 189–91, 193–5 Gui’an Integrated Bonded Zone establishment 326–7 Guizhou: channels for investment attraction 207–8; financial support for enterprises 211; foreign capital utilization 205–9; foreign economic cooperation and trade 210; foreign investment management 209; foreign investment structure 208; going-global initiatives 210–11; investigation on

Index  349 enterprises 211; inward and outward investment of 205–6; overseas enterprises in 209–10; overseas investment 205–7, 209–11; plan for 2016 207–11; policies to promote inward and outward investment 204; project implementation 208; vitality for outbound economic development 209 Hainan: foreign capital utilization 131; investment in BRI countries 132; investment of BRI countries in 132; inward and outward investment of 131–2; overseas investment of 131–2; policies to promote inward and outward investment 129–30; prospects for 2016 132–3 health: foreign investment in China 22, 22 Heilongjiang: development trends and prospects for 2016 265–7; foreign capital utilization 262–3; foreign investment 264; foreign loans 263; investment in BRI countries by 266–7; investment of BRI countries in 266; inward and outward investment of 262–6; launch opening-up plans 261; outward investors 264–5; overseas investment activities 263–4; overseas project contracting 264; policies to promote inward and outward investment 261–2; policies to promote opening-up 261–2; quality talents and technologies 264; streamline administration and delegate power 262 Hong Kong SAR: and foreign direct investment 6–7; outward investment in China 44–5, 46 Hunan: foreign capital utilization 179–82, 184–5; growth in total inward and outward investment 179; investment in and from BRI countries in 2015 187; overseas investment 180–1, 183–7; policies to promote inward and outward investment 179; structure of inward and outward investment 179–81; trends and prospects for 2016 184–7 IMF see International Monetary Fund (IMF) Interim Regulations on the Management of Statistical Survey Items 323 International Cultural Expo 342–3 International Monetary Fund (IMF) 88

investment see foreign investment investment in BRI countries: Fujian 121; Hainan 132; Jiangsu 97–8; Jiangxi 178; Liaoning 251–2; Ningbo 113, 113–14, 114; Qingdao 147; Shandong 140–1; Shanxi 163–4; Xiamen 128–9; Xinjiang 237 investment in BRI countries by: Heilongjiang 266–7 investment milestones 2015 323–44; Asian–African Summit 331; China–ASEAN FTA Upgrading Negotiations 328; China–Australia Free Trade Agreement 334; China–Belarus Industrial Park Coordination Working Group 328; China–CEEC Investment and Trade Expo 333–4; China–EU Summit 335; China–Indonesia Highlevel Economic Dialogue 327; China–Japan–ROK FTA negotiations 326; China–Pakistan Free Trade Agreement (2015) 323; China–Pakistan FTA negotiations 330, 336; China–ROK Free Trade Agreement 329; China–US Bilateral Investment Treaty Negotiations 328; China–US BIT negotiations 333; Chinese and Foreign Investment Promotion Agencies Conference (2015) 327; Foreign Exchange Administration for Direct Investment 329; Free Trade Agreement 333, 341–2; Gui’an Integrated Bonded Zone establishment 326–7; Law of the People’s Republic of China on Foreign Investment 327; National Imports and Exports Work Conference 2015 328–9; National Working Conference on Market System Development 329; outward foreign direct investment 323–5; Pilot Reform of the China (Shanghai) 328 investment of BRI countries: Fujian 121; Hainan 132; Heilongjiang 266; Jiangsu 97; Ningbo 112, 113; Xiamen 128; Xinjiang 236 Investment Promotion Agency of the Ministry of Commerce 327 Japan: foreign direct investment 8 Javid, Sajid 339 Jiangsu: balanced distribution of foreign capital 93–4; capital increment and M&A 94; foreign capital utilization 92–5; foreign-funded enterprises performance 95; forms of foreign

350  Index Jiangsu  continued investment 94–5; international capacity cooperation 98–9; investment in BRI countries 97–8; investment of BRI countries in 97; inward and outward investment of 92; open economy, in 2016 98–100; outward investment in secondary industry 96; overseas investment 95–7; policies to promote inward and outward investment 92; preferential funding abroad 100; transformation and upgrading of development zones 99 Jiangxi: foreign capital utilization 175–7; growth in total inward and outward investment 173–4; investment in BRI countries 178; overseas investment 175–8; policies to promote inward and outward investment 173; problems in inward and outward investment 175–6; prospects for 2016 176–9; structure of inward and outward investment 174–5 Jilin 257; foreign capital utilization 258; foreign direct investment 258; foreign investment management 260; foreign loans 258; foreign preferential loans 259–60; inward and outward investment of 259–61; overseas investment 259, 260–1 Kumsishvili, Dimitri 344 Kunshan Experimental Zone 95 Lancang–Mekong River Cooperation 218 Latin America: China’s investment stock in 35 Law of the People’s Republic of China on Foreign Investment 327 leasing and business services industry: foreign investment in China 18–19, 20, 61n7 Liaoning 250; development trends and prospects for 2016 251, 252–3; foreign capital utilization 250–1; investment in and from BRI countries in 2015 251–3; investment in BRI countries 251–2; inward and outward investment of 250–1; overseas investment 251; policies of liaoning to promote inward and outward investment 250 Li Keqiang 341 Michel, Charles 335 Mohan–Boten Economic Cooperation Zone 336

National Commercial Work Conference (2015) 344 National Development and Reform Commission 330 National Foreign Investment Work Conference 331 National Imports and Exports Work Conference 2015 328–9 National Plan of Circulation Node Cities (2015–2020) 332 National Working Conference on Market System Development 329 Ningbo 105; growth of inward and outward investment 107–8; investment in BRI countries 113, 113–14, 114; investment of BRI countries in 112, 113; policies to promote inward and outward investment 105–7; problems of inward and outward investment 109–11; prospects for 2016 111–12, 114–16; structure of inward and outward investment 108–9 Ningxia: development trends and prospects for 2016 247–50; foreign investment 246–7; growth of inward and outward investment in 2015 245–6; investment in and from BRI countries in 2015 248–50; inward and outward investment 248; overseas investment 247; policies of Ningxia to promote inward and outward investment 245; structure of inward and outward investment 246 non-financial OFDI flows: of China by region 2007–2015 312–13 non-financial OFDI stocks: of China by region 2007–2015 314–15 Oceania: China’s investment stock in 36 OECD see Organisation for Economic Cooperation and Development (OECD) OFDI see outward foreign direct investment (OFDI): local enterprises in 60, 61; surpasses FDI to make China net capital exporter 25–6, 26 OFDI flows of China: by industry 2007–2015 318 OFDI stocks of China: by industry 2007–2015 319 Organisation for Economic Cooperation and Development (OECD) 323 outward foreign direct investment (OFDI) 67, 68, 211; China’s OFDI flows by country/region 2007–2015 292–9; China’s OFDI in BRI countries/regions

Index  351 in 2015 308–9; China’s OFDI stocks by country/region 2007–2015 300–7 outward investment: global distribution of China’s OFDI by 2015 311; nonfinancial OFDI flows of China by region 2007–2015 312–13; non-financial OFDI stocks of China by region 2007–2015 314–15; OFDI flows of China by industry 2007–2015 318; OFDI stocks of China by industry 2007–2015 319 outward investment of China 23–4, 24; China’s investment in major economies 43–54; Chinese investors 55, 55–6, 56, 56, 57; investing enterprises by region and industry 57, 57–61, 58, 59, 59, 60, 60; investment flows and stocks 25–43 outward investment projects 67 overseas investment: Anhui 167–8; Beijing 67–8; Chongqing 202; Dalian 254–5; Fujian 116; Gansu 229–30; Guangxi 191–4; Guizhou 205–7, 209–11; Hainan 131–2; Heilongjiang 263–4; Hunan 180–1, 183–7; Jiangsu 95–7; Jiangxi 175–8; Jilin 259, 260–1; Liaoning 251; Ningxia 247; Qingdao 147–9; Qinghai 231; Shaanxi 223; Shandong 134, 137; Shenzhen 150–3; Sichuan 197; Tibet 221, 222; Xiamen 127–8; Xinjiang 233–5 Pilot Free Trade Zone 330, 331 Pilot Program of Further Opening Up the Service Sector, Beijing 63 Pilot Reform of the China (Shanghai) 328 policies to promote inward and outward investment: Anhui 165; Beijing 63–6; Chongqing 201; foreign direct investment (FDI) 212; Guizhou 204; Hainan 129–30; Heilongjiang 261–2; Hunan 179; Jiangsu 92; Jiangxi 173; Ningbo 105–7; Shanghai 77–81; Shanxi 159–60; Tianjin 70–2; Xiamen 123–6; Xinjiang 233; Xinjiang Production and Construction Corps (XPCC) 241 postal services: foreign investment in China 20, 21 Pritzker, Penny 341 Qingdao 144–5; breakthroughs in cooperative development 148; business environment improvement 146–7; expanding scope of overseas project contracting 148; foreign-invested

enterprises 147; foreign investment structure improvement 145–6; foreign investment utilization 145–7; growth in foreign M&A investment 148; growth of investment in BRI countries 147; innovation on foreign investment management system 146; overseas investment 147–9; overseas labor cooperation markets development 148–9 Qinghai: foreign capital utilization 230–1; foreign investment quality 232; inward and outward investment in 2015 230–1; overseas investment 231; prospects for 2016 232–3 Regional Comprehensive Economic Partnership Agreement (RCEP) 341 region and economy: FDI flows by (2010–2015) 272–81; FDI stocks by (2000, 2010 and 2015) 282–7 Republic of Korea (ROK): foreign direct investment 8 Robb, Andrew 334 Russia: China’s investment in major economies 53–4, 54 Samoa: foreign direct investment 9 SCO see Shanghai Cooperation Organization (SCO) SCO Countries Trade & Investment Promotion Conference (2015) 338 Shaanxi: achievements in international cooperation in science and education 226; comprehensive support capacity 227–8; connectivity promoted in allround way 224–5; foreign investment 223; international economic and trade cooperation 225–6; investment in and from BRI countries 223–8; overseas investment 223; people-to-people communication 226–7; relevant policies 223–4 Shaanxi–Guangdong–Hong Kong–Macao Economic Cooperation 223 Shandong 133; challenges and opportunities 134–6; construction of logistics channels 142; development trend prospects for 2016 137–40; exploration of international markets 142–3; FDI from different countries 134, 136; FDI in different industries in 134, 135; growth in inward and outward investment 133; industry and country

352  Index Shandong continued distribution of inward and outward investment 134; innovation in financing models and promoting finance 143; international cultural exchanges and people-to-people bonds 143–4; investment from BRI countries 141, 141; investment in BRI countries 140–1; overseas investment 134, 137; policy communication 142; prospects for 2016 141–4; recommendations 144; work coordination and linkage 142 Shanghai: financial services support for inward and outward investment 79–80; growing risks for outward investment 87; growing volatility in utilization of foreign capital 87, 87; investment in and from BRI countries 90, 90, 90–2, 91; inward and outward investment of 81–90, 82, 84, 84, 85, 87; leapfrog development of outward investment 85, 86; negative list-centered investment management system establishment 78; policies to promote inward and outward investment 77–81; prospects for 2016 88–92; reform of business registration system to facilitate investment 78–9; science and technology innovation center 80–1; supply of public services and built a new service mechanism 81 Shanghai Cooperation Organization (SCO) 336 Shanxi 158–9; development trends and prospects for 2016 162–3; growth in total inward and outward investment 160; investment from BRI countries 163; investment in BRI countries 163–4; inward and outward investment of 163–5; inward and outward investment structure 160, 161; policies to promote inward and outward investment 159–60; problems in inward and outward investment 160, 162; prospects for 2016 164–5 Shanxi Brand Silk Road Tour 159 Shenzhen 149; foreign investment management mechanism 154; foreign investment utilization 150, 153–4; growth in overseas investment 152–3; investment destination countries and regions 151; investment from BRI countries 152; investment industries 151; inward and outward investment of

150–1; market access of foreign investment 153–4; OFDI in BRI countries 152; overseas investment 150–1; policies issued by Shenzhen in line with the BRI 149–50; prospects for 2016 153–8; quantity and quality of FDI 152; speeding up going-global 154–6; taking the initiative to participate in BRI implementation 156–8; transnational corporations to 154 Sichuan: cooperation in international production capacity 200–1; foreign capital utilization 195–7; foreign investment utilization 197–8; ideas for future work 199–201; inward and outward investment of 195–8; lack of highlight in going-global 198; overseas investment 197; progress in implementation of BRI 198–9; transferred industries 200 Silk Road Economic Belt 149 Silk Road Fund 81, 219 Singapore: foreign direct investment 7–8; global outward investment 7 Sino–CEEC (Ningbo) Industrial Park 115 Sino–Czech (Ningbo) Industrial Cooperation Park 115 Sino-foreign equity joint ventures 3 small and medium-sized enterprises (SMEs) 217 Snyder, Rick 336 social security: foreign investment in China 22, 22 social welfare: foreign investment in China 22, 22 SOEs see state-owned enterprises (SOEs) Special Drawing Rights (SDR) basket 343 special-purpose equipment manufacturing industry: foreign investment in China 16–17, 17, 61n4 State Administration of Foreign Exchange 323 State Council of China 63 state-owned enterprises (SOEs) 42, 66, 217 Strategic Cooperation Framework Agreement 74 structure of inward and outward investment: Chongqing 201–2; foreign direct investment (FDI) 213–15; Fujian 118–19; Hunan 179–81; Jiangxi 174–5; Ningbo 108–9; Ningxia 246; Xinjiang 234–5; Xinjiang Production and Construction Corps (XPCC) 242

Index  353 Summer Davos World Economic Forum 337 Taiwan: foreign direct investment 10 tax revenue: from foreign-invested enterprises 4 TBIs see technology business incubators (TBIs) technology business incubators (TBIs) 64 TEDA see Tianjin Economic-Technological Development Area (TEDA) Tianjin: building of an open economy 73–5; development and reform commission 70; enterprises going global faster following the BRI 75–6; FTZ management committee 74–5; investment in and from BRI countries in 2015 76–7; inward and outward investment of 72–6; inward and outward investment regulations of 70–2; policies to promote inward and outward investment 70–2; problems of inward and outward investment 76; prospect for investment in and from BRI countries in 2016 77; prospect for inward and outward investment in 2016 76; reform and innovation in FTZ 73; supporting policies and measures 72 Tianjin Economic-Technological Development Area (TEDA) 74 Tibet: foreign capital utilization 221–2; inward and outward investment of 221; overseas investment 221, 222; prospects for 2016 222–3 transportation: foreign investment in China 20, 21, 61n5 United States: China’s investment in major economies 50–1, 52; foreign direct investment 8–9; invested enterprises in China 4 Vilsack, Thomas 341 Vision and Actions on Jointly Building Silk Road Economic Belt 330 Wang Xiaotao 340 warehousing: foreign investment in China 20, 21 wholesale and retail sales industry: foreign investment in China 19–20, 21, 62n9 WTO Ministerial Conference 344

Xiamen: foreign capital utilization 126–7; investment in BRI countries 128–9; investment subsidy 123; inward and outward investment of 126–8; loan with discount interest 125; overseas investment 127–8; policies to promote inward and outward investment 123–6; prospects for 2016 129; resource transportation subsidy 123–4; reward for overseas project contracting 124–5; subsidy for letter of guarantee costs 124; subsidy for overseas emergency response 124; subsidy for overseas investment 124; subsidy for personal accident & and work-related injury insurance 124; subsidy for training of outbound labor 124; subsidy limits 125–6; upfront costs subsidy 123 Xi Jinping 330, 335, 338–40, 342 Xinjiang: development trends and prospects for 2016 236; economic and political uncertainties 235; environment for foreign investment in 235; foreign capital utilization 233, 234; foreign economic and trade cooperation 238–41; foreign investment 234–5; growth of inward and outward investment 234; investment in and from BRI countries in 2015 237–41; investment in BRI countries 237; investment of BRI countries in 236; lack of domestic support for overseas investment 235; overseas investment 233–5; policies to promote inward and outward investment 233; policy planning system 237; projects promoting 237–8; structure of inward and outward investment 234–5 Xinjiang Production and Construction Corps (XPCC): development trends and prospects for 2016 243–4; growth of inward and outward investment 241–2; investment by BRI countries in 244; investment of XPCC in BRI countries 244; policies to promote inward and outward investment 241; RMB exchange rate 242; structure of inward and outward investment 242 XPCC see Xinjiang Production and Construction Corps (XPCC)

354  Index Yangtze River Economic Belt 98, 195, 200, 332 Yang, Wang 341 Yunnan 211 Zhangjiagang Bonded Zone 95 Zhejiang: foreign capital in development zones 101–2; foreign capital utilization (2015) 100–2; industrial distribution

101; investment from European and American countries 101; large-scale projects and capital increment projects 100–1; outward investment in 2015 102–3; prospect for the 13th five-year plan period 103–5; steady progress in investment 102 Zhongguancun enterprises 63, 64 Zhong Shan 336, 344