At the second preparatory meeting for the 10th China International Fair for Investment and Trade, China's only annual event focusing on promoting worldwide investment, Zhao Chuang, Deputy Director of the Department of Foreign Economic Cooperation of the Ministry of Commerce, discusses the prospects for Chinese enterprises' overseas investment with Beijing Review reporter Dai Xiaohua.

Beijing Review: Why has the Chinese Government proposed the strategy of optimizing foreign investment structure, expanding overseas investment and encouraging Chinese enterprises to "go global?"

Zhao Chuang: As we all know, introducing foreign direct investment (FDI) is an important part of China's opening up, a basic national policy. From 1978, when China's reform and opening up began, to the end of 2005, the Chinese Government had approved the establishment of more than 500,000 foreign-funded enterprises, with paid-in capital exceeding $270 billion. So far, more than 190 countries and regions have investments in China. The number of research and development centers foreign investors have set up in China tops 700, and more than 40 multinationals have established regional headquarters in the country. Most of the foreign-funded enterprises are performing well, and they are playing an increasingly important role in China's economy.

At the beginning of this century, according to the overall needs of China's peaceful development, the Chinese Government proposed the strategy of optimizing foreign investment structure, expanding overseas investment and encouraging Chinese enterprises to "go global." The strategy is of realistic importance and far-reaching significance for China to ensure a sustainable, sound and stable development, enhance its role in world affairs and develop a strategic partnership with other countries.

How has the "going global" strategy been implemented? Are there any problems?

In recent years, Chinese enterprises have expanded their presence in the international market and shown a strong momentum in investing abroad. Over the past few years, China's outward direct investment has grown at an annual average of 20 percent, with the highest yearly growth of 80 percent. Annual investment has averaged $6-7 billion. As of the end of 2005, outward direct investment by Chinese enterprises reached $51.7 billion. At this rate, China's annual overseas investment is expected to soar to $30 billion in 2020, ranking it among leading capital exporters in the world. The UN is optimistic about China's potential in this regard, listing it as one of the emerging investment sources.

But we should be clear-minded about the fact that China's overseas investment is still small in comparison with the foreign direct investment it has received, needless to say capital exports of developed countries. The above-mentioned total outward investment of $51.7 billion of China over the past few decades only accounted for that of the United States or Germany for one year. China still has a long way to go to become an investment source worthy of the name.

Chinese enterprises' "going global" strategy is welcomed by most foreign countries, especially developing ones. But some tend to politicize it. They consider normal business expansion of Chinese enterprises and their mergers and acquisitions of local businesses as a threat, and impose access barriers for Chinese investment. A typical example is the failed bid of China National Offshore Oil Corp. (CNOOC) to acquire U.S.-based Unocal Corp. Such a takeover deal is common in the international business world, but it was rejected by U.S. legislators for political concerns.

In addition, some local governments and departments haven't fully realized the importance of overseas investment. They habitually attach importance to introducing FDI, while being reluctant to support powerful enterprises to enter the world market, which affects the implementation of the "going global" strategy to some extent.