Turning the Golden Key

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When Wu Bangguo,Chairman of the Standing Committee of the 11th National

People’s Congress, turned the“golden key” to officially open the 15th China International Fair for Investment and Trade (CIFIT) on September 7, John Delaney was standing at the Xiamen International Conference and Exhibition Center to watch the opening ceremony. It was the fifth time Delaney, Vice President of Large Industry Investment Asia of Air Products and Chemicals(China) Investment Co. Ltd., was in Xiamen for the CIFIT.
“I think CIFIT can provide the best platform for me to find investment projects in China,” Delaney told Beijing Review.
Delaney signed six investment agreements at the CIFIT last year with actual investment of $300 million, mainly in the chemical industry and refineries. This year, he brought with him eight executives from his company and planned to invest $500 million in China’s chemical industry, iron and steel and electronics sectors.
“Right now, China’s investment environment is the best in the world,” he said, adding that all his investments in China in the previous years have been successful. Starting in 1987, Delaney has invested in more than 50 cities in China. “The returns for all the investments have exceeded my expectations,” he said.
Delaney was one of 15,118 overseas participants at the 15th CIFIC, an annual event held since 1997 in Xiamen, an island city in southeast China’s Fujian Province. By the time CIFIT wrapped up on September 11, the five-day fair witnessed 493 investment projects signed with a total investment of$21.45 billion, including $17.37 billion of foreign investment.
A rapidly developing investor
As an investment and trade promotion platform, the CIFIT not only provides communications for foreign investors such as Delaney to look for investment opportunities in China, but also helps Chinese investors reach abroad.
“China has a vibrant economy and its outbound investment has developed quickly in recent years,” Shen Danyang, spokesman of the Ministry of Commerce (MOFCOM) who is also the Director of News Center of the Organizing Committee of the 15th CIFIT, told Beijing Review.
“But China’s outbound investment is still in its preliminary stage,” said Shen. China’s$317.2-billion outbound investment stock in 2010 only accounted for about 1.6 percent of global foreign investment stock that year, which was $20.4 trillion. The world’s largest economy, the United States, saw its outbound investment exceed $320 billion in 2010.
Despite China’s meager contribution, China’s outbound investment has risen quickly, especially in the last three years, said Shen. The combined outbound investment from 2008 to 2010 exceeded $180 billion, accounting for 60 percent of China’s outbound investment stock in 2010. Meanwhile, China’s overseas mergers and acquisitions (M&As) have witnessed rapid growth in recent years. In 2010, overseas M&As grew at a rate of 55 percent and in the first half of this year, growth hit 125 percent.
“Rapid development of China’s outbound investment is helping and will continue to help adjust its own economic structure, boost economic and social development of investment recipients and encourage global economic growth,” said Shen.
Decade in the WTO
China’s rapid economic growth as well as its outbound investment hasn’t been achieved overnight. China’s entry into the WTO a decade ago has given the country a strong boost.
“China’s accession to the WTO has greatly helped my company in its process of going global,” Dong Haiyang, Vice President of Beijingbased BAIC Motor Corp. Ltd., told Beijing Review. It has helped increase mutual trust between Chinese companies and their international partners in business negotiations and other issues such as solving disputes and arbitration clauses, said Dong. “Because we can play under the same rules,” he said.
In December 2009, BAIC signed an agreement with automaker SAAB and acquired three vehicle development platforms, related technologies and the intellectual property rights of two series of turbo-charged engines from the Sweden-based vehicle company, a milestone in the company’s overseas investment.
“I am glad to see that during the decade after China entered the WTO, China and its

international partners have achieved winwin development in the areas of international trade, foreign direct investment (FDI) and outbound direct investment (ODI),” said Chen Deming, Minister of Commerce at the 2011 International Investment Forum held under the framework of the CIFIT to commemorate the 10th anniversary of China’s accession to the WTO.
Statistics from the MOFCOM show that China utilized $114.7 billion of FDI in 2010, a great leap forward compared with $46.9 billion in 2001.
In addition to attracting FDI, the past decade also witnessed growth in China’s investment in overseas market. In the early years after China entered the WTO, its ODI was no more than several billion dollars a year. However, last year, the number surged up to $68.81 billion, making China the fifth largest international investor.
Calling for an open world
Of course, joining the WTO not only brings China great opportunities by allowing Chinese enterprises to do business with their international partners on an equal footing, but also means obligations and challenges.
According to Chen, so far, China has opened its markets to foreign investors in more than 100 service sectors and nearly all the manufacturing sectors, the same level as some developed countries. MOFCOM statistics show that service sectors have utilized 46 percent of China’s total FDI. China is now the world’s second largest service outsourcing destination.
“In the process of attracting FDI, China has gone through a bumpy development road,” said Chen. To improve its investment environment, China has formulated a series of laws and regulations, focusing on protecting intellectual property rights and cracking down on fake and low-quality goods.
Despite these efforts, China is still a major target of trade protectionism. Especially during the current stage when some countries are suffering from the global financial crisis and sovereign debt crises, trade and investment protectionism in some countries is on the rise.
“During the process of going global, Chinese enterprises have been supported by most countries,” said Chen. “However, there are some countries that do not welcome foreign investment and some large economies exclude China’s investments under the name of national security.”
On September 5 2011, the WTO Appellate Body ruled in favor of the U.S. decision to impose punitive duties of 35 percent against Chinese tire imports, quoting damages to its own tire industry. MOFCOM expressed its regret. In early 2011, Huawei Technologies Co., a leading global information and communications technology solutions provider of China, called off its bid to take over 3Leaf Systems, a computer firm of the United States, due to the heavy pressure from the Committee on Foreign Investment in the United States.
“These practices cannot help our joint efforts of coping with the financial crisis,”said Chen, adding that the world should maintain an environment to liberalize trade and facilitate investment for all countries to cope with the challenges of the global financial crisis.
(Reporting from Xiamen)
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