e-magazine
Charting the Course
China reviews the year gone by and sets new goals accordingly
Current Issue
· Table of Contents
· Editor's Desk
· Previous Issues
· Subscribe to Mag
Subscribe Now >>
Expert's View
World
Nation
Business
Finance
Market Watch
Legal-Ease
North American Report
Forum
Government Documents
Expat's Eye
Health
Sci-Tech
Lifestyle
Books
Movies
Backgrounders
Special
Photo Gallery
Blogs
Reader's Service
Learning with
'Beijing Review'
E-mail us
RSS Feeds
PDF Edition
Web-magazine
Reader's Letters
Make Beijing Review your homepage
Business
Print Edition> Business
UPDATED: January 26, 2015 NO. 5 JANUARY 29, 2015
Eyes on the East
China's reforms and structural rebalancing are hot topics at the 2015 World Economic Forum annual meeting
By Zhou Xiaoyan
Share

Katherine Garrett-Cox, CEO of Alliance Trust PLC, an investment and financial services company headquartered in Dundee, Scotland, said China's slowdown is not a periodic phenomenon, but a structural change.

Although China's GDP growth rate slowed in 2014, the 7.4-percent growth is still envied by many countries in the world, she said.

Jaspal Singh Bindra, CEO of Standard Chartered Asia, also said 7.4 percent is a speed that many countries dream of achieving, adding that China should increase the proportion of its service industry in the broader economy during its structural rebalancing.

Klaus Schwab, founder of the WEF, said he has long been optimistic that China is on the right path of structural adjustment and reforms.

China is still the largest contributor to global economic growth, and the country's success is impressive. It will be crucial to find ways to unlock China's growth potential in a balanced and sustainable way, said Schwab, who turned the world-renowned ski resort of Davos into a venue for the global exchange of opinions.

"I applaud the efforts the Chinese leadership is undertaking in this regard. The transition from mass production to innovation-driven growth is underway, but challenges remain," he said.

Confronted with the possibility of such challenges, Schwab seems unperturbed. "I've learned that those who are pessimistic about China's development and course are usually proven wrong," he said.

A major investor

During the WEF annual meeting, Premier Li said Chinese companies will be encouraged to explore the international market, and work for common development with businesses from other countries through greater openness toward each other.

The export of excess capacity in China's advantageous industries will create a win-win result.

"On the one hand, it will greatly improve local people's lives; on the other, it can stimulate demand and prevent deflationary risks against the backdrop of declining global demand," Li said in Davos.

China used to be a hotspot destination for global capital, by virtue of its cheap land, abundant and cheap labor force and preferential government policies.

The country, however, is changing from a capital receiver to a global investor.

According to data from the Ministry of Commerce (MOFCOM), outbound direct investment (ODI) from China totaled $102.9 billion in 2014, up 14.1 percent, making the country the third largest global investor, whereas foreign direct investment (FDI) to China totaled $119.56 billion, up only 1.7 percent. "China will soon become a net investor," said Zhong Shan, Vice Minister of the MOFCOM.

"The Chinese Government will encourage Chinese businesses to invest overseas so that they have more development room and can help those countries receiving investment create more jobs, increase tax revenue and promote their economic growth," Zhong said.

As the next step, China will further expand outbound investment with the Silk Road Economic Belt and 21st Century Maritime Silk Road initiatives and encourage advantageous industries and excess capacity to transfer to countries along the two proposed trade routes, Zhong said.

"Opening factories overseas is not the purpose. Pure manufacturing is meaningless. When investing overseas, Chinese companies should have their own technologies, research and development teams and their own brand, so as to grow hand-in-hand with the local community and reach a win-win result," said Dong Mingzhu, President of Gree Electric Appliances based in Zhuhai, south China's Guangdong Province, during a sideline of the 2015 WEF annual meeting.

Jin-yong Cai, Executive Vice President and CEO of the International Finance Corp., said exports of China's advantageous industries, such as infrastructure construction, will provide a foundation for future growth in the recipient countries.

"Several risks should be factored in by Chinese businesses when investing overseas," Cai said. "First, it might be easy to construct a project, but could be difficult to gain returns on that investment due to political instability in some countries. That could be solved by making ordinary people beneficiaries of the project or building shared interests with local companies."

A shortage of talent is the biggest obstacle standing in the way of Chinese companies' overseas foray.

"Companies investing overseas should be fully aware of the local culture, political environment, legal environment and language. Lacking familiarity with all the above-mentioned areas would be the biggest constraint," said Justin Yifu Lin, a professor of economics at Peking University and former chief economist and Senior Vice President of the World Bank.

Email us at: zhouxiaoyan@bjreview.com

   Previous   1   2  



 
Top Story
-Empowerment Through Infrastructure
-Special Reports: APEC China 2014
-Protection at Home
-A Weaker Union
-Will the 'China Miracle' Continue?
Most Popular
在线翻译
About BEIJINGREVIEW | About beijingreview.com | Rss Feeds | Contact us | Advertising | Subscribe & Service | Make Beijing Review your homepage
Copyright Beijing Review All right reserved