Latest News:  
Beijing   Sunny    35 / 22 ℃  City Forecast

Home>>China Business

Foreign investment encouraged

By Wang Xinyuan (Global Times)

08:13, July 05, 2012

China vows to help private companies invest abroad by giving them financial and tax support, according to a joint statement released Wednesday.

Domestic banks will be encouraged to provide short-term loans, export credit and collateral loans to private companies' overseas assets, said the statement, which was issued by 13 government agencies, including the Ministry of Finance.

Under the new policy, private companies will be able to buy or sell foreign currency directly without having to go through approval procedures, and they can also reduce or be spared paying taxes domestically to avoid double taxation.

"This shows that yuan convertibility under the capital account is being expedited," Sun Fei, director of the Chinese Enterprises Overseas Development Center, told the Global Times.

The new policy will help channel China's $3.2 trillion in foreign reserves to invest overseas and get returns, he said.

China has been speeding up reform by recently launching a pilot scheme for yuan convertibility in Qianhai, in the southern city of Shenzhen.

The lack of yuan convertibility and capital controls have blocked private companies from investing abroad although they are more vigorous and productive than State-owned enterprises (SOEs), Sun noted.

Over the past few years, China has encouraged domestic companies to acquire and invest in overseas assets, but SOEs have been taking the lead.

China's outbound direct investment in non-financial sectors reached $28.5 billion in the first five months, up 40.2 percent from a year ago, according to the Ministry of Commerce.

The joint statement shows that the country hopes to bolster its slowing economy by reinvigorating private companies, said Zhou Dewen, chairman of the Wenzhou SME Development Association.

Zhou said that 70 percent of local private companies do business overseas and will hope to benefit from the new policy.

The new measures indicate that details on direct investment overseas by local residents might also come out soon.

The central government gave its approval in March for Wenzhou to accelerate its financial reforms by allowing residents to invest abroad, but detailed guidance has not yet been released.

Risks remain in expanding overseas given global economic uncertainties, Ji Li, an analyst with Zero2IPO, told the Global Times in an e-mail. But the new measures should help Chinese exporters in setting up facilities in foreign markets and sell goods there, Ji noted.

Email|Print|Comments(Editor:厉振羽、张洪宇)

Leave your comment0 comments

  1. Name

  

Selections for you


  1. Enjoy waves of Sanniang gulf in China's Guangxi

  2. "Bull fight" event performed in E China

  3. 12th Chinese naval escort flotilla sets sail

  4. Memory in black and white: Old China

Most Popular

Opinions

  1. China faces long-term regional annoyances
  2. Japan’s space law shift rattles regional nerves
  3. Experts call for an end to dispute over islands
  4. Border conflict laid aside as giants draw closer
  5. Take wait-and-see approach to US sanctions
  6. Money not a panacea for small business problems
  7. 'Global effort needed to fight corruption'
  8. New welfare stock accounts' impact limited
  9. Leftover men to be a big problem
  10. A symbol of affluence or a trap of luxury?

What's happening in China

Stunning scenery in Red Rocks

  1. China will retain a high economic growth
  2. Central bank injects more liquidity
  3. Fishermen sue oil firm in US
  4. Adopted children discover China
  5. Dangdang CEO apologizes over 'Peeping Tom'

China Features

  1. Why Chinese people love luxury goods?
  2. Official puts on airs in prison
  3. Beautiful scenery of Inner Mongolia Grassland
  4. Sharpshooter with excellent skills
  5. Chinese tourist witnesses "mystery dark circle"

PD Online Data

  1. Spring Festival
  2. Chinese ethnic odyssey
  3. Yangge in Shaanxi
  4. Gaoqiao in Northern China
  5. The drum dance in Ansai