Early this year Forest Trends published a
report “Chinese Overseas Investment in Forestry and Industries with High Impact
on Forests: Official Guidelines and Credit Policies for Chinese En terprises
Operating and Investing Abroad”.
According
to the report, Chinese enterprises invested US$90 billion in 5,090 foreign
companies in 156 countries, a year on year increase of 17%. Of the total,
investments in Hong kong, ASEAN, EU, Australia, USA, Russia and Japan totalled
USD 65.5 billion around 73% all overseas investments.
But
investment flows to Hongkong, the EU and Japan fell in 2013 compared to a year
earlier. The value of China's investments grew in Russia (US$4.1 bil.), the US
(US$4.2 bil.), Australia (US$3.9 bil.) and ASEAN (US $5.7 bil.). The greatest
increase was seen in investments in Russian companies.
In
terms of investment categories, 90% of China's outward FDI in 2013 was to
service industries (33%) followed by mining (22%), wholesale and retail (15%),
manufacturing (10%), construction (7%) and transportation (3%).
The
pace of growth in investment in the construction sector was particularly high
in 2013. The data from the Ministry of Finance indicates that some 527,000
Chinese workers were sent to foreign companies in 2013, a year on year increase
of 15,000 employees. In total by the end of 2013, China had around 7 million
people overseas employed in support of its outward investment.
The
majority of China's outward FDI originates from state - owned enterprises
(national, provincial, and municipal) although the government is encouraging
outward FDI by private enterprises. Geographically, enterprises in the
industrial and commercial centres in the coastal cities and provinces are
responsible for most outward FDI.
Provinces
where forestry and wood processing is strong such as Shandong and Yunnan tend
to feature in FDI in the timber sector. A powerful incentive for outward FDI is
provided by the government in the form of financial backing.
Chinese
enterprises on an approved list benefit from the government's financial support
in the form of access to below - market rate loans, direct capital contribution
and subsidies associated with official aid programmes.
The
incentives are backed up by various guidelines to banks and financial
institutions to encourage them to ensure their clients comply with
environmental and social standards, including host-country laws and
regulations. The most recent green credit guidelines (2012) are the most
comprehensive yet, but as with the other guidelines, their implementation has
so far been patchy.
However,
the government has plans to enforce them more strictly. All guidelines and
policies share the basic and fundamental requirement that host - country laws
and regulations must be followed. Despite the poor implementation of past
guidelines the most recent environmental protection and green credit guidelines
offer clear opportunities for host-country governments, NGOs, and campaigners
to highlight occasions where Chinese companies are operating in breach of their
own government's regulations and laws.
Direction
of outward investments
According
to records kept by China's Ministry of Commerce, investments in forestry and
other land-use sectors have been made in the following regions and countries:
- Africa :
Fourteen countries in Africa have received FDI in agriculture and fo
restry, in particular Gabon , Zambia, Equatorial Guinea, Liberia, Republic
of Congo and Cameroon.
- Asia : Outward
FDI in logging and processing has been mainly directed to Laos, Myanmar,
Thailand, and Korea . Efforts have been made to establish plantations in
areas previously under opium poppy cultivation in Laos, Thailand, and
Myanmar.
- Latin America
and Caribbean : While less significant than Africa or Asia, Chinese
investments have been expanding in Brazil, Argentina, Venezuela, Peru and
Guyana.
- Russia: Chinese
investment has focused on logging, timber processing, pulp and paper and
other products and is concentrated in the border areas in Siberia and the
Russian Far East. Chinese outward FDI has been encouraged by the Russian
and Chinese governments through supportive programmes that began in 1997.
Business & Investment Opportunities
Saigon Business Corporation Pte Ltd (SBC) is incorporated
in Singapore since 1994.
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