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MNI POLICY: China Should Strategise Outbound Investments

MNI (Sydney)

China should seek the urgent protection of its overseas investments amid growing forces of deglobalisation and protectionism, and include these measures in its 2020-2035 modernisation strategies, said Xiao Gang, a senior fellow at China Finance 40 and former chairman of the China Securities Regulatory Commission.

China has much at stake as its cross-border investments have surged along with its growing involvement in the global economy, particularly among the Belt & Road nations, said Xiao at the China Finance 40 Qujiang Forum on Saturday.

He said China could accelerate bilateral investment treaties (BITs) with Belt & Road countries and upgrade current BITs to improve clauses on national treatment and the Most Favored Nation status of Chinese companies, and on the transfer of investment profits.

China should also participate actively in multilateral and regional law making and cooperate with global institutions and NGOs, Xiao said.

Authorities could further support export credit insurance to protect companies from overseas political risk.

GLOBAL RESOURCES

Armed with China's significant quantities of foreign exchange, Chinese companies are out and competing for global resources, Xiao said, noting the total assets of overseas companies directly invested by Chinese entities totaled USD6.6 trillion as at the end of 2018.

While the global easing environment shored up currencies in some emerging markets and could potentially enhance regional cooperation, advanced economies represented by the U.S and emerging markets such as India have tightened rules curbing foreign investments following the Covid-19 pandemic, Xiao noted.

China's overseas direct investment fell 6.5% y/y in the first seven months to USD64.2 billion, official data showed.

MNI Sydney Bureau | +61-405-322-399 | lachlan.colquhoun.ext@marketnews.com
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MNI Sydney Bureau | +61-405-322-399 | lachlan.colquhoun.ext@marketnews.com
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