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English>>China Business

SOEs urged to invest overseas but avoid

By Ding Qingfen (China Daily)

09:10, November 16, 2012

Even though State-owned enterprises have recently been making more outbound direct investments, they must be careful not to expand too quickly overseas, the State-Owned Assets Supervision and Administration Commission has warned.

For SOEs, "the process of 'going abroad' must be steady" and undue haste should be avoided, said Shao Ning, deputy director of the commission.

In his report to the 18th National Congress of the Communist Party of China, President Hu Jintao said the country should encourage domestic companies to increase the pace of outbound investments.

China saw its ODI increase to $60 billion in 2011, making it the fifth-largest investing country in the world.

From January to August, China's ODI increased by 29 percent to reach $52.52 billion.

SOEs have contributed greatly to the increase. From 2005 to 2010, SOE overseas investment rose to $49.9 billion, from $9.6 billion, accounting for 84 percent of the country's total.

Shao called on SOEs to be cautious as they move forward.

"On the one hand, SOEs have to go abroad," he said. "It's already an unavoidable trend."

But "on the other hand, they have to strengthen their competitive abilities on their way to becoming international."

China's SOEs have encountered many obstacles to the fulfillment of their overseas plans. Foreign governments, for instance, have blocked various proposals on national security concerns.

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