Beijing [China], July 3: The fact that Chinese enterprises may soon accelerate overseas investment is seen as a strategic expedition to support the country's economy amid many difficulties.
In an analysis sent to Thanh Nien , Moody's Analytics, a member of Moody's Investment Services Group - one of the three most prestigious financial credit rating agencies in the world, predicted that China will provide stronger policy support in the form of financial incentives, tax subsidies and consulting services to help its enterprises increase overseas investment from next year.
Economic expedition
Specifically, this year, China introduced the "Digital Silk Road Construction Action Plan" and "Guidelines for Overseas Green Investment", providing funding for companies investing in cloud infrastructure and artificial intelligence projects in emerging markets, and providing consulting services for companies investing in various green projects. These policies are expanded from existing support frameworks such as the "Going Global" program and the Belt and Road Initiative (BRI).
The Chinese government has also simplified approval procedures for overseas investments. For example, it has a global public service platform that makes it easier for companies to meet the origin requirements of the Regional Comprehensive Economic Partnership (RCEP). China has also strengthened cooperation with Central Asian and African countries to establish the "China-Eurasia Trade and Investment Promotion Center" to provide one-stop approval services and pilot duty-free supply chain services in countries such as Kenya.
In addition, China also has some financial support channeled through policy banks, providing finance on preferential terms. Under this model, since
From 2013 to 2023, the Export-Import Bank of China has provided more than $400 billion in loans for BRI projects. The government also supports insurance programs to reduce risks for businesses investing abroad. Typically, the China Export and Credit Insurance Corporation (Sinosure) provides export credit insurance and overseas investment insurance covering political and commercial risks.
According to Moody's Analytics, the emerging markets that Chinese enterprises are targeting are South Asia, Southeast Asia, Latin America and the Middle East.
Solving the challenge
The increased foreign investment is seen as increasing gross domestic product (GNI) and helping to offset the negative economic impact of declining exports and domestic consumption. At the same time, the "expeditionary" strategy also helps China diversify its economy, improve its net international investment (IIP) position, and increase its available assets to support the long-term growth potential of the mainland economy.
This is all the more significant as the challenges to the Chinese economy become greater, especially at a time when the US-China trade conflict is escalating. Late on June 30, the South China Morning Post reported that China has reiterated its warning to other countries not to agree to terms that would hurt Beijing economically in order to reach a trade deal with the US, especially as the deadline for trade negotiations with Washington approaches. Accordingly, Beijing officials are concerned that countries from Europe to Southeast Asia could join a trade deal with the US to redirect supply chains and reduce bilateral trade with China. Many governments could even withdraw from Beijing-led projects.
Meanwhile, Nikkei Asia reported that China's manufacturing sector contracted for the third consecutive month in June, although the pace of decline slowed thanks to an increase in new orders. However, these orders are believed to have originated from the agreement from late last year, which is now only taking effect. China's National Bureau of Statistics also announced that the Purchasing Managers' Index (PMI) in June reached 49.7, up from 49.5 in May. However, this figure is still below the 50 mark, meaning that production and business are shrinking, the economy is in decline.
Therefore, the "expedition" of the business sector in the coming time will be even more important to the Chinese economy.
Source: Thanh Nien Newspaper
