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Ministry predicts new surge in ODI

China.org.cn, January 5, 2012

• The scale of accumulative outbound direct investment (ODI) for 2011-15 will reach the level of the nation's foreign direct investment (FDI), a statement from the Ministry of Commerce said Wednesday.

  China's ODI from 2011 to 2015 is expected to register double-digit annual growth to reach US$560 billion.

  The government will accelerate promoting "overseas investment" during the 12th Five-Year Plan (2011-15) period, according to the statement.

  "The annual growth rate (from 2011 to 2015) for the nation's ODI on average will remain around 17 percent, and the accumulative volume in the five years is expected to reach US$560 billion, equivalent to that of China's FDI during the same period," it said.

  ODI growth has remained robust despite the global financial crisis.

  ODI surged 21.7 percent year-on-year to US$68.81 billion in 2010, growing for the ninth straight year and recording an average annual growth rate of 49.9 percent. China overtook Japan and the United Kingdom that year to become the world's fifth-largest overseas investing nation.

  From January to November of 2011, ODI in the non-financial sector grew by 5.2 percent year-on-year to US$50 billion, said the ministry. By the end of November accumulative investment reached US$312 billion.

  In the statement the ministry said the government will guide and encourage local companies to enhance cooperation and invest abroad in manufacturing, energy, culture and engineering.

  And China will also promote investment in the service sector, including finance, architecture, tourism, education and telecoms.

  By the end of 2010, Chinese enterprises established 16,000 overseas companies in 178 countries, covering all economic sectors and focusing on six industries, including business service, banking, retail and wholesale, mining, manufacturing, and transport, according to the ministry.

  ODI will play a more dominant role in the future, said Professor Chong Tai-leung of the Chinese University of Hong Kong's Institute of Global Economics and Finance in a China Daily report.

  "I predict that ODI, rather than FDI, will be dominant in the future as more mainland firms are taking excess cash outside the country to invest in various economic projects overseas," he said .

  "More ODI means that capital is invested outside the country, so that the ODI will not help boost domestic economic growth very much.

  "But ODI can help mainland corporations to expand their business footprint through technology and management skills."

  FDI growth

  The FDI outlook is less promising. From 2011 to 2015, China's annual FDI is expected to reach, on average, US$120 billion, with improved quality and diversification, the statement said.

  During 11 months of 2011, China's FDI surged by 13 percent year-on-year to US$103.8 billion, close to the level of 2010, although the FDI in November fell by 9.76 percent from a year earlier.

  China has been the most attractive FDI destination among developing countries for 19 years up to and including 2010, according to the ministry.

  During the first 11 months?of 2011, capital inflow to China from 10 Asian nations and regions including Japan, Thailand and Singapore soared 17.98 percent to US$89.58 billion while that from the EU inched up a negligible 0.29 percent. FDI from the US plunged by 23.05 percent year-on-year to US$2.74 billion in the first 11 months, compared with a 14.11 percent rise to US$3.56 billion in the same period of 2010.

  China will encourage foreign enterprises to invest in agriculture, high-end manufacturing, high-tech, new energy and services, the statement said.

  According to the ministry's statement, China's foreign trade will expand at an annual rate of 10 percent to reach US$4.8 trillion by 2015.

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