Expert: Chinese firms have key role in economic revival from COVID impact
China continued to be the world’s second-largest source of foreign investment in 2019, with its outbound direct investment standing at $136.91 billion, according to a report issued on Wednesday.
The report, jointly released by the Ministry of Commerce, the National Bureau of Statistics and the State Administration of Foreign Exchange, said that the nation’s ODI in 2019 had decreased by 4.3 percent year-on-year.
Analysts said that despite the contraction in the global economy, Chinese enterprises’ ODI will not only contribute to host economies’ taxation and employment in the short term, but also help to sustain market confidence to support their long-term economic development.
At the end of 2019, China’s ODI stock－the value of investors’ equity in and net loans to enterprises in overseas economies－reached $2.2 trillion, following the United States at $7.7 trillion and the Netherlands at $2.6 trillion.
Zhou Mi, a senior researcher at the Chinese Academy of International Trade and Economic Cooperation in Beijing, said, “Chinese enterprises are engaged in a high level of economic activity abroad, providing new growth drivers for faster development in host economies.”
“Under the current circumstances, Chinese enterprises’ participation in local economic and social development is also important for global economic revival from the impact of the COVID-19 pandemic,” he said.
Chinese enterprises can help host countries fight against COVID-19, through introducing China’s experience and the medical protective resources that China has the capacity to produce, he said.
Wang Maobin, investment department chair at the University of International Business and Economics in Beijing, said that as the world’s second-largest economy, China’s ODI has maintained steady growth momentum in recent years.
These investments, based on commercial and win-win principles, always are mutually beneficial to all parties involved.
Although COVID-19 has had a severe impact on the global economy, China has showed strong economic recovery thanks to its successful measures to control the epidemic, and the flow of its ODI is expected to remain stable, he said.
According to the ministry, China’s overseas enterprises made significant contributions to taxation and employment in the host economies, bringing remarkable win-win effects.
In 2019, the total amount of taxes paid by China’s overseas enterprises to the countries where they invested was $56 billion. Their foreign employees totaled 2.27 million, increasing by 389,000 compared with 2018.
Their investment in 2019 covered 188 countries and regions around the world, with a steady increase observed in Belt and Road related economies.
By the end of 2019, more than 27,500 Chinese domestic investors had established 44,000 ODI enterprises in 188 countries and regions around the world, with year-end overseas enterprise assets totaling $7.2 trillion.
Chinese enterprises’ year-end ODI stock in BRI-related economies was worth $179.47 billion, accounting for 8.2 percent of the total amount.
Investments by China’s overseas enterprises accounted for 4.7 percent of the value of the nation’s goods exports, or 116.7 billion yuan ($17.27 billion), and related sales amounted to $2.51 trillion, increasing 4 percent year-on-year.
Their investment was in a wide range of industries, with more than 70 percent flowing into sectors such as leasing and business services, manufacturing, finance, and wholesale and retail, while 80 percent of the year-end ODI stock was concentrated in the services sector.
However, Wang said China should pay attention to the quality of its ODI, to better suit its “dual circulation” development pattern through meeting domestic market needs via investment activities in overseas economies.