What Is an Outward Foreign Investment?

Foreign investment is also called "overseas investment". Sovereign countries invest in other countries or regions in order to obtain foreign exchange income or squeeze into foreign markets. Foreign investment and capital export are two different concepts. The former generally refers to the investment activities carried out by developing countries abroad for the long-term benefits of their own economic development without sufficient construction funds. This is a world economic phenomenon that only appeared after the war. The latter is an important means for capitalist countries to seek the most favorable investment venues for their "excess capital" in order to obtain high profits and economic expansion. ^[1]

Foreign investment

Right!

Foreign investment is also called "overseas investment". Sovereign countries invest in other countries or regions in order to obtain foreign exchange income or squeeze into foreign markets. Foreign investment and capital export are two different concepts. The former generally refers to the investment activities carried out by developing countries abroad for the long-term benefits of their own economic development without sufficient construction funds. This is a world economic phenomenon that only appeared after the war. The latter is an important means for capitalist countries to seek the most favorable investment venues for their "excess capital" in order to obtain high profits and economic expansion. ^[1]

Foreign investment can be classified according to different signs.

1. Divided into long-term investment and short-term investment according to the length of investment

Status and Trend of China's Outward Direct Investment

In the late 1990s, in the face of the trend of in-depth development of economic globalization, in order to meet the needs of China's industrial restructuring and sustainable economic development, the Chinese government proposed the implementation of the "go global" strategy, encouraging businesses of various ownerships with comparative advantages Foreign direct investment and transnational operations have promoted China's powerful enterprises to continue to grow and develop through foreign investment. Since the implementation of the "go global" strategy, China's foreign direct investment has developed rapidly, and Chinese companies have gradually become a new force in the global direct investment field.

In terms of overall scale, according to the UNCTAD World Investment Report, China s outward direct investment (outflow) flows from 1984 to 2004 have grown at an average annual rate of 13.9%. According to statistics from the Ministry of Commerce, China s net foreign direct investment in 2004 reached US $ 5.5 billion, a year-on-year increase of 93%. By the end of 2005, China s cumulative net foreign direct investment was US $ 51.72 billion.

Based on the 2004 foreign direct investment flows and stocks issued by the UNCTAD World Investment Report 2005 as the base period, China s net net foreign direct investment in 2004 and China s cumulative net net foreign direct investment as of the end of 2004 were equivalent to the global equivalent. Foreign direct investment flows and stocks of 0.8% and 0.46% are equivalent to 6.6% and 4.3% of global direct investment flows and stocks of developing countries and regions. It should be said that the development potential is still great.

In 2005, China's net foreign direct investment reached US $ 6.9 billion; a total of 1065 overseas Chinese-funded enterprises were established and approved by the Ministry of Commerce.

According to the demand structure of the international investment market, based on the needs and possibilities of overseas direct investment in China's economic development, China's foreign direct investment has gradually expanded over the past 20 years since reform and opening up, and a diversified structure has been formed in the main structure, industry distribution, and regional flow pattern.

From the perspective of investment entities, the types of ownership have become increasingly diverse, and the proportion of state-owned enterprises has declined. Since the reform and opening up, the Chinese government has encouraged the development of various economic components, and a situation of common development of multiple forms of ownership has developed in the country. The report of the 16th National Congress of the Communist Party of China stated that "encourage foreign-owned enterprises with various comparative advantages to invest abroad to form a group of powerful multinational enterprises." This has stimulated the enthusiasm of multi-ownership enterprises for transnational operations, and gradually changed the pattern of state-owned enterprises occupying an absolute majority. Taking 2004 as an example, the proportion of state-owned enterprises in domestic investment entities was 35%, a decrease of 8 percentage points from the previous year; the proportion of limited liability companies and private enterprises was 30% and 12%, an increase of 8 percentage points and 2 Percentage points. Foreign investment enterprises also include joint-stock companies, joint-stock cooperative enterprises, collective enterprises and associates. Foreign-invested enterprises and Hong Kong, Macao and Taiwan-funded enterprises account for 7% of domestic investment entities.

From the perspective of the investment industry, the scope of involvement has been expanding, mainly in the mining, manufacturing, wholesale and retail, and business services industries. After more than 20 years of development, China's foreign investment has gradually expanded from the past to the trade sector, and has gradually expanded to a wider range of industries, including resource development, industrial production, agricultural and agricultural product development, commercial retail, consulting services, and research and development centers. . In 2003 and 2004, investment in the four major industries of mining, manufacturing, wholesale and retail, and business services accounted for 92.6% and 74.7% of the total foreign direct investment in that year, respectively. From the perspective of stock, as of the end of 2004, the cumulative investment in industries such as mining, manufacturing, wholesale and retail, and business services accounted for 77.5% of China's cumulative total foreign direct investment.

From the perspective of regional flow, the number of overseas investment target countries has gradually increased, with the Asian region as the focus. China's outbound investment first entered Hong Kong from the beginning, and now covers more than 160 countries and regions on five continents, covering more than 80% of the countries and regions, including more than 90% of Asian countries with Chinese direct investment companies 80% in Europe and 79% in Africa. In 2004, Chinese investment in Asia accounted for more than half of that year's foreign direct investment, and investment in Latin America accounted for 32%. By the end of 2004, cumulative investment in Asia accounted for 74.6% of China's cumulative foreign direct investment, becoming a key region for China's foreign direct investment.

From the perspective of investment methods, the trend of cross-border mergers and acquisitions has become stronger and has become the main mode of foreign investment. Since 2004, Chinese enterprises have gradually increased their cross-border mergers and acquisitions, and the amount of mergers and acquisitions has been huge. It has had a wide international impact and has drawn the attention of the international community. These mergers and acquisitions have successes and failures, but they all show that Chinese companies have initially been able to fight the storms of the international market.

Looking at the future trends, the "11th Five-Year Plan" period is an important opportunity period for China to accelerate the implementation of its "go global" strategy, and the development of foreign direct investment also faces a better internal and external environment. From the domestic point of view, China's economic aggregate, foreign trade, foreign investment attraction and foreign exchange reserves are at the forefront of the world. The process of strategic adjustment of the economic structure has accelerated, and a number of industries and products with comparative and competitive advantages in the international market have been formed. The RMB exchange rate The formation mechanism is advancing steadily, and policies and measures to support and encourage "going global" will be improved. From an international perspective, the world economy is generally on the rise and transnational direct investment is picking up year by year; economic globalization and regional economic integration have deepened, promoting trade liberalization and investment facilitation, and accelerating the process of world industrial structure adjustment and cross-border industrial transfer. In the future, China's foreign direct investment will show the following major trends:

The scale of investment will continue to expand rapidly. China's per capita GDP has exceeded $ 1,000, and it has entered a period of rapid growth in foreign investment. Foreign direct investment will gradually expand from traditional manufacturing to service and high-tech industries. Cross-border mergers and acquisitions will become an important way for China's foreign direct investment. Some scholars predict that in the five years from 2006 to 2010, China's foreign direct investment totaled 60 billion U.S. dollars, which will reach 17.6 billion U.S. dollars in 2010, with an average annual growth rate of 22%.

The pace of manufacturing foreign investment will further accelerate. China's manufacturing industry has large production capacity and strong international competitiveness, but structural contradictions remain outstanding. Some industries have overcapacity and foreign trade frictions have increased. In the future, in order to achieve sustainable development and expand the market, and in order to reduce foreign trade friction and create a good environment for their own development, manufacturing enterprises will accelerate foreign investment and gradually realize diversification of markets, foreign trade methods and origin.

Private enterprises have become a new force, and the leading role of large enterprises has continued to increase. As the environment for the equal development of the non-public sector of the economy is guaranteed by law, the enthusiasm of private enterprises for overseas investment is increasing, and it has emerged in the international market. It will become China's foreign direct investment with its clear property rights, flexible mechanisms, and rapid response capabilities Fresh force. China's large-scale enterprises have increasingly experienced international operations, and their international competitiveness and overall strength have continued to increase. The leading role will further emerge, and Chinese multinational companies will also become larger.

With the continuous development of China's multilateral and bilateral economic and trade relations, judging from the current trends, China's foreign direct investment has great potential and optimistic prospects. The main reasons for this good development are as follows:

First, since the 20th century, the in-depth development of economic globalization has promoted the deepening of the international division of labor, and promoted the rapid and large-scale flow of funds, products, technology and personnel internationally. China proactively adapts to the trend of economic globalization, and is also actively conducting foreign investment while attracting foreign investment. At present, regional economic cooperation is in the ascendant, and participation in regional economic cooperation has become an important choice for countries to formulate economic policies, implement opening up, and adjust industrial structures. The liberalization and facilitation of trade and investment advocated in regional economic cooperation and the strengthening of investment promotion policies formulated by various countries to attract foreign investment provide a better external environment for China's foreign investment.

Second, the first two decades of the 21st century are an important period of strategic opportunity for China. The Chinese government has taken the building of a well-off society in an all-round way as the goal of social development, and China is making strategic adjustments to its economic structure. This adjustment will provide China with a wider space and a more solid foundation for the rational allocation of resources worldwide, the development of emerging industries, and the vigorous development of international markets.

Third, with the establishment and gradual improvement of the socialist market economic system in China, Chinese enterprises have initially established modern enterprise systems. Many enterprises have accumulated rich international business experience in engaging in foreign investment and transnational business operations. Strength has gradually increased. In the face of new development opportunities, enterprises as market players will fully seize the opportunity to participate in international economic competition and cooperation.

Fourth, with the gradual improvement of the world economic situation, a new round of international industrial transfer and structural adjustment, represented by information technology, has accelerated, and international investment has become more active. According to the predictions of international experts, a modest recovery in international direct investment may occur in the next few years, which will drive the gradual activeness of the global M & A market, which will also drive the growth of Chinese enterprises' overseas investment.