China to Continue Global Expansion despite Economic Contraction: Official
China expects exports to slow over the last quarter of 2011 in the face of "grim challenges" posed by the world's economy, according to a senior Chinese official. Speaking on the side-lines of a high-level conference in Geneva, Switzerland, China's Vice Commerce Minister Chen Jian also confirmed that Beijing would continue to pursue its goal of globalising the national economy by increasing outward investment to regions such as Europe.
"In recent years, the outward investment of Chinese companies has made some headway," Chen told the conference. "By 2010, Chinese business' direct outward investment hit US$68 billion, bringing the stock of the investment up to $310 billion."
Over the past decade, China has emerged as the world's number one exporter, as well as the second biggest importer and destination of foreign direct investment. Outward-bound investment has seen particularly spectacular growth, up from US$1 billion in 2001 to some US$60 billion a year today.
But while Chinese investment in the developing world - particularly Africa and Latin America - has expanded dramatically in recent years, Chen suggested that initiatives in the developed can be expected to expand in the near future as Chinese businesses become more familiar with markets.
"Europe-bound investment shows a momentum of rapid growth in recent years, reaching $6.8 billion in 2010, up 102 percent and accounting for 10 percent of China's total outbound investment in the same year," he said. "China's development represents an opportunity for companies across the world."
While there has been criticism in some circles of the value of Chinese overseas investments - with some projects being slammed for importing a Chinese work force - Chen emphasised the positive role that his country's investments play in the world. Last year, overseas Chinese companies generated 780,000 jobs and US$11.7 billion in tax revenues for host governments, he said, adding that the investments of Chinese companies were "well-received by local people" due to their contributions to infrastructure development, adherence to corporate social responsibility, and improvements to local living conditions.
In response to growing fears over China's assertive push into outward investment, the vice minister called for those still harbouring doubts about the role of Chinese companies to "scrap unwarranted old thinking" and regard the country's overseas investments in an "objective and fair light." He insisted that co-operation with the China's "going global" strategy would produce mutual benefits for investors and recipients alike.
In its newest Five Year Plan (FYP), which was passed in March 2011, Beijing announced a shift in economic development from export-orientation - a key factor in its growth strategy for the past 30 years - to a pattern that relies more heavily on domestic consumption. Over the next five years, China will focus on scientific development, "vigorous" expansion of domestic demand, more balanced regional development, as well as "speed up the building of an energy-conservative and environment-friendly society." Retail sales of consumer goods are projected to reach US31 trillion by 2015, while imports would rise to US$8 trillion.
Chen acknowledged that it appears China and, indeed, the world will continue to face economic uncertainty in coming months. However, he insisted that Beijing would not use shrinking demand for exports as an excuse to devalue the yuan, its currency, also known as the renminbi.
"I don't think it's related to the situation," he said. "I think that since China embarked upon the path of renminbi value related to a basket of currencies it's more the market that decides the value of the renminbi."
The meeting - which was convened by the International Centre for Trade and Sustainable Development, the publisher of Bridges - drew an array of Chinese and other global business leaders and policymakers.
On multilateral trade issues, Chen suggested that the "next WTO round should be on sustainable development."
China WTO Ambassador Yi Xiaozhun, who was also present at the meeting, also commented on the possibility of China's participation in the Trans-Pacific Partnership (TPP), a regional trade deal currently being negotiated by the Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, the United States, and Vietnam.
The nine countries involved in the proposed accord held negotiations earlier this month, and will meet again in October in the hopes of preparing an outline for the November Asia-Pacific Economic Cooperation Leader's Meeting (see Bridges Weekly, 21 September 2011). Yi said that China welcomed "all trading arrangements" but expressed some doubt over whether the deal was "open," as well as whether China would be welcome to participate.
Yi acknowledged that China was currently in talks with countries involved in the deal about the possible benefits that could come from China's participation. However, the ambassador insisted that they would have to consider the implications of such a deal on their WTO obligations and stressed that WTO commitments would trump any commitments under such a deal.