The Amount Of Overseas Investment Of Chinese Enterprises Continues To Hit New Highs

Pan Gongsheng, deputy governor of the People's Bank of China and director of the State Administration of Foreign Exchange, said at the 2017 annual meeting of the China Development Forum that China's overseas direct investment (ODI) grew rapidly in 2016, up 40% year on year, while the growth rate in previous years was generally between 10% and 20%. Pan Gongsheng said: "On the whole, this is a good thing. It is good for promoting the transformation of China's economy, promoting the growth of the world economy and the economy of the host country, and achieving a pattern of mutual benefit and win-win results comprehensive national strength The macro background of the increase in openness, the steady progress of the Belt and Road Initiative and international production capacity cooperation. "

However, Pan Gongsheng pointed out that in the daily supervision, there are also some irrational and abnormal investment behaviors, such as domestic steel mills buying catering companies overseas, and those who open restaurants in China buying online game companies overseas. For example, he said, "Last year, Chinese enterprises purchased many football clubs overseas. I think it is good to say that acquisitions are conducive to improving China's football level. But is this the case? There are many enterprises, whose debt ratio in China is already very high, who borrow a lot of money to purchase overseas. Some of them transfer assets under the packaging of direct investment."

Pan Gongsheng stressed that, Chinese government Chinese enterprises have been encouraged to participate in the international market and foreign investment, but foreign investment should be more healthy and orderly. In the past few months, the growth rate of ODI has declined, and market players are gradually returning to rationality. In the 1980s, there was also a strong call for Japan to buy the United States. Such a lesson is not far away. When Chinese enterprises go global, going fast does not mean going well, and only going steadily can they go well. Pan Gongsheng said, "I have also been engaged in overseas mergers and acquisitions in commercial institutions. Sometimes overseas mergers and acquisitions are like a bunch of thorny roses. You must be careful and go through full argumentation. It's like picking up a handful of sand on the beach. It seems that you have caught it, but it will eventually flow away from you."

Pan Gongsheng pointed out that from the beginning of this century to the first half of 2014, China experienced a significant cross-border capital inflow, and capital outflows began in the second half of 2014. This is highly consistent with the international trend. From the beginning of this century to 2013, cross-border capital flowed into emerging markets significantly. Since the Federal Reserve discussed withdrawing from QE in 2013, many emerging market The economy suffered a sudden reversal of capital inflows into outflows, resulting in devaluation of the local currency, reduction of foreign exchange reserves and turbulence in the capital market.

Pan Gongsheng pointed out two important factors for observing cross-border capital flows: more diversified holders of external assets and the process of external debt repayment. Previously, the main holders of China's foreign assets were official foreign exchange reserve assets, which were more than 70% at the highest time. However, since 2010, the proportion of foreign assets held by market entities has continued to increase, reaching 50% by 2016. In addition, during the implementation of quantitative easing monetary policy by the Federal Reserve, Chinese enterprises accessed more foreign debt. After the Federal Reserve began to raise interest rates and the domestic financing environment was also improved, enterprises began to accelerate the repayment of foreign debt from the second half of 2014 to reduce the risk of currency mismatch. However, Pan Gongsheng pointed out that since the second quarter of 2016, the process of corporate external debt deleveraging has basically ended and the scale of external debt has begun to increase.

Pan Gongsheng stressed that China's cross-border capital flows are converging to a balanced state. At the beginning and end of 2016, the US dollar index experienced significant fluctuations, which also caused fluctuations in China's foreign exchange market, but the fluctuations at the end of 2016 were much smaller. In February, the balance of China's foreign exchange reserves increased. Pan Gongsheng believes that China's cross-border revenue and expenditure in the future has a sound and stable foundation. China's economy is in the middle and high speed growth range. With the deepening of supply side structural reform, China's economic growth will be more qualitative in the future. China's current account surplus remains within a reasonable range, and China will remain one of the most competitive and attractive important destinations for overseas long-term capital investment. China has abundant foreign exchange reserves, accounting for 28% of the global foreign exchange reserves.

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