The Policy Of Encouraging Foreign Investment To Set Up Factories Should Be Moderate.

Liu Yunsheng, member of the CPPCC National Committee and chairman of the Tianjin Pipe Group Corporation and Secretary of the Party committee attending the eleven session of the CPPCC National Committee, said in a proposal submitted to the general assembly that the implementation of "going out" has been a major strategy for China's economic development and an important measure to comprehensively improve the level of opening up to the outside world. It is recommended to encourage powerful enterprises to invest and build factories overseas.

Liu Yunsheng suggested that we should simplify auditing procedures for overseas investment and build factories, further intensify policy support, further play the role of embassies and consulates abroad, formulate special guidance documents, and intensify the training and introduction of international talents.

It is of great practical significance for the state to encourage enterprises to invest and build factories overseas. For example, it is easier to occupy the international market. However, under the present circumstances, we should give moderate encouragement to overseas investment and build factories, rather than excessively encourage them.

First of all, from the perspective of employment, the current employment situation is grim.

During the two sessions this year, Tian Chengping, Minister of labor and social security, said: "for cities and towns, we demand employment every year in cities and towns, including the new urban labor force and 24 million people who failed to work in the previous year.

However, we can only provide about 12000000 jobs in cities and towns every year.

In addition, there are about 8 million rural surplus laborers moving to cities every year.

This means that China's new labor force now has more than 20 million people every year.

If excessive encouragement is given to overseas investment, it may aggravate the tension of domestic employment. It is difficult to achieve the goal of reducing the unemployment rate from 4.6% to 4.5% in 2008.

Secondly, many industries in China, especially the upstream industry, still have problems of overcapacity. If enterprises go overseas to invest and build factories, excess capacity will be difficult to digest by themselves, and may become more prominent, so that the allocation of resources will be unbalanced in part.

In fact, even in the case of enterprises, overseas investment is often faced with a lot of uncertainty risks.

Take the footwear industry as an example.

Before and after the Spring Festival, the processing trade in the Pearl River Delta has undergone pformation pains, and thousands of shoe enterprises have closed down.

After the closure of some shoe factories, they moved to Vietnam, where the labor force was cheaper, aimed at reducing labor costs and preventing export barriers due to trade friction.

However, those who moved to Vietnam and other places found that their production costs had risen sharply, and their efficiency had dropped sharply.

The reason is that Vietnam and other countries do not yet have a perfect market for raw materials and equipment. Most of the raw materials and shoemaking equipment must be purchased from the mainland.

Moreover, the shoe industry chain is complex and diverse, and Vietnam and other countries lack all kinds of professional equipment, and also lack of raw material procurement, skilled professionals and skilled labor workers. Therefore, equipment is to be purchased from home, talents should be imported from the country, and without any reason, a lot of costs will be added, so that those newly relocated enterprises will complain incessantly.

In addition, there is a very large policy uncertainty risk in the investing countries.

In 2005, PetroChina and Sinopec jointly invested $1 billion 420 million to acquire the Andean oil company of Canada's en Cana group. The company has 5 oil block assets and development rights in Ecuador, 80 thousand barrels of Nissan oil and fifth of South America's output, and is the largest foreign-funded enterprise in Ecuador.

However, in October 12, 2007, Ecuador suddenly announced in the form of presidential decree, imposing a very heavy special income fund, bringing 99% of the extra income from foreign oil companies to the state.

The investment of Chinese enterprises has suffered heavy losses.

For enterprises, the purpose of overseas investment and construction is to obtain profits, and to obtain profits, the investment places must have advantages of avoiding weaknesses, fully exploiting potentials, reducing costs and avoiding risks. Enterprises should make comprehensive assessments of various favorable and unfavorable factors, weigh the advantages and disadvantages before making decisions, and not blindly invest abroad in order to blindly invest in the corporate image.

As for the country, as an incentive policy maker, we should make a comprehensive plan from the perspective of national interests.

For example, we should encourage those resource enterprises lacking in our country to go out and solve our country's energy security problems; for example, encourage those enterprises that can absorb foreign high-tech talents and absorb advanced foreign technology to invest and build factories abroad, so as to enhance the technological innovation ability of Chinese enterprises and so on.

That is to say, we should pay attention to two points to encourage overseas investment and build factories. First, we must reflect the obvious tendency and not give policy support to foreign investment and factories.

Two, we should be modest. We should not invest in factories outside China.