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Jiangsu

(1) Recent policies of Jiangsu to promote inward and outward investment

In recent years, in order to seize the important historical opportunity of the BRI, carry out the BRI, implement the Guiding Opinions of the State Council on Promoting International Capacity and Equipment Manufacturing Cooperation (GF[2015] No. 30), promote economic restructuring and industrial transformation and upgrading, explore new space for industrial development, create new impetus for economic growth and open wider to the outside world, Jiangsu formulated the Opinions on Seizing the Opportunities of the Belt and Road Initiative for Better Overseas Investment, Jiangsu Province’s Action Plan for Promoting International Capacity and Equipment Manufacturing Cooperation and Jiangsu Province’s Three-year Action Plan for Promoting International Capacity and Equipment Manufacturing Cooperation (2016-2018). These greatly promoted inward and outward investment of the province.

(2) Inward and outward investment of Jiangsu in 2015

In 2015, faced with a complex macroeconomic environment and mounting downward pressure on the economy, Jiangsu Province seized the opportunity of major national strategies, actively adapted to and led the economic new normal, expanded its opening-up to the outside world in an all-round way, and moved faster to explore new development space. It delivered stable economic performance, improved economic structure and accelerated transformation. It witnessed quality improvement in foreign investment and rapid growth of outward investment.

1) UTILIZATION OF FOREIGN CAPITAL

In 2015, the growing polarization of the world economy, the tumbling ruble, the interest-rate hikes of the Federal Reserve of the United States, the aftermath of the European debt crisis and commodity price shocks interwove into an extremely complex situation. The utilization of foreign capital in Jiangsu stayed at a low

Regional investment analysis report 2015 93 level after the turning point of 2014, with a smaller scale and a slower pace of growth. That said, the structure of foreign capital utilization was improved and foreign-funded enterprises delivered stable performance while accelerating their transformation and upgrading.

i) Less foreign capital utilized. In 2015, Jiangsu Province approved 2,580 new foreign investment projects, down 14.9%; the actual utilization of foreign capital was US$24.27 billion, down 13.8%; the contractual foreign investment reached US$39.36 billion, a decrease of 8.9%. The actual utilization of foreign capital in Jiangsu accounted for 19.2% of China’s total, ranking second in the country. The decline in actual and contractual utilization of foreign capital was milder in 2015 as Suzhou, Nanjing and Wuxi contributed more than 50% of the province’s total foreign capital utilization and achieved growth in contractual foreign investment utilization.

it) Improved structure of foreign capital utilization. First, the proportion of foreign investment utilized hi the service sector increased. In 2015, the actual utilization of foreign capital in the seivice sector reached USS 11.32 billion, accounting for 46.6% of the province’s total, an increase of 3.1 percentage points over 2014. Specifically, foreign investment in the modem seivices industry increased significantly to US$4,981 billion, an increase of 8.6% year-on-year, accounting for 44.02% of the total foreign investment hi the service sector, an increase of 6.6 percentage points over 2014. The financial services industry, including financial leasing, saw rapid growth, utilizing US$3.26 billion of foreign capital, an increase of 14.6% year-on-year, contributing 28.8% of the total foreign investment in the service sector, the second largest contribution following that of the real estate industry. Financial services became a new foreign investment growth driver hi the service sector and the province was home to 165 foreign-funded financial leasing enterprises. The health, social security and social welfare industry witnessed an increase in foreign investment of 792% year-on-year, foreign investment in the information transmission, software and information technology services industry grew by 71.2%, and that in life seivices and other services grew by 51.6%. The foreign capital utilization of the real estate industry fell by 25.2% year-on-year, a decrease of 7.9 percentage points over the previous year.

Second, the use of foreign capital in strategic emerging industries increased significantly. In 2015, Jiangsu Province saw an increase of 11.6% in the actual utilization of foreign capital in its 10 strategic emerging industries. The advanced manufacturing industry contributed 46.8% of the province’s total foreign capital utilization, an increase of 10.7 percentage points over 2014. Specifically, the actual utilization of foreign capital of the new-generation information technology industry, new energy industry and smart grid industry increased by 60.7%, 79.9% and 76.03% respectively.

Hi) More balanced distribution of foreign capital. In 2015, the actual utilization of foreign capital in southern Jiangsu, central Jiangsu, northern Jiangsu andcoastal Jiangsu were US$15,562 billion, USS4.175 billion, US$4,536 billion and USS427 million respectively, accounting for 64.1%, 17.2%, 18.7% and 16.1% of the total respectively. The proportions of central Jiangsu and coastal Jiangsu increased by 0.8 and 0.9 percentage points respectively over 2014. Among the 13 cities in Jiangsu, Nanjing, Wuxi, Zhenjiang, Nantong, Taizhou and Huai’an saw growth in their actual utilization of foreign capital. In terms of the sources of foreign capital, the EU and BRI countries greatly increased their investment in Jiangsu Province. In 2015, the EU invested USS1.819 billion in the province, a year-on-year increase of 32.6%, accounting for 7.5% of the total, an increase of 2.6 percentage points over 2014. The actual use of foreign capital from France, in particular, registered a year-on-year growth of 525.8%. BRI countries invested US$1,295 million in 201 projects in Jiangsu Province. Specifically, the investment from Malaysia, Indonesia and Poland increased by 576.7%, 387.1% and 848.3% respectively. In addition, the actual investment from the offshore companies in the Cayman Islands and Samoa increased by 141.9% and 25% respectively.

iv) Capital increment and M&A. hi 2015, 1,459 foreign-funded enterprises in Jiangsu added to their capital, with a total contractual foreign investment of US$16,853 bilhon, up 13.4%, accounting for 42.8% of tlie total contractual foreign investment in the province, an increase of 8.4 percentage points. Foreign investment for M&A in the province reached US$3.32 billion, up by 28.1%, accounting for 13.7% of the total actually utilized foreign capital. In 2015, a total of 589 foreign-funded enteiprises in Suzhou increased their capital, adding US$5.12 billion in contractual foreign investment, accounting for 57.3% of tlie total. There were 55 new foreign-funded M&A projects, involving a total value of US$170 million. Capital increment and M&A became important ways for foreign capital to flow into Jiangsu.

v) Well-developed new forms of foreign investment. First, an increasing number of regional headquarters and functional institutions of multinational companies settled in the province. In accordance with the Opinions on Encouraging Multinational Corporations to Set Up Regional Eleadquarters and Functional Institutions in Jiangsu Province issued and revised by relevant departments of Jiangsu Province in 2015, the establishment of regional headquarters and functional institutions of multinational companies in Jiangsu Province shall be encouraged and supported financially. In 2015, five new such regional headquarters and two functional institutions were established in the province. By the end of 2015, the total number of such regional headquarters and functional institutions in Jiangsu reached 141, including 72 regional headquarters and 69 functional institutions.

Second, the service industry opened wider to foreign investment. A total of eight new foreign-invested companies, 12 foreign-funded independent R&D institutions, 21 new foreign-funded financial leasing enterprises and three new foreign-funded pilot business factoring enterprises were set up in Jiangsu Province. Suzhou BenQ Medical Center was approved as a wholly foreign-owned hospital, the second of its kind in Jiangsu Province following Nanjing BenQ Medical Center.

Third, the pilot reform of foreign investment in finance steadily advanced. In March 2015, Zhangjiagang Bonded Zone was approved by the State Administration of Foreign Exchange of the PRC as one of the three pilot areas for macroprudential management of foreign debt. In July, the People's Bank of China approved the pilot project of “cross-border loans” for Taiwan-funded enterprises in Kunshan Experimental Zone. By the end of 2015, 267 enterprises engaged in such borrowing and lending activities, 168 of which did two-way business. The total value involved was RMB18.672 billion, including RMB12.08 billion borrowed and RMB6.664 billion lent (RMB582 million for Taiwan-funded enterprises), saving more than RMB300 million in financing costs for related enterprises. The pilot cross-border RMB business in Suzhou Industrial Park showed a good momentum. In 2015, seven enterprises in the park signed eight cross-border RMB loan contracts, with a total value of RMB819 million. Eight enterprises drew RMB809 million and 19 enterprises repaid RMB 1.681 billion in cross-border RMB loan principal. In September, the National Development and Reform Commission of the PRC issued a circular to reform the management of foreign debt and implement the filing system for the issuance of foreign debts by enterprises. By the end of 2015, enterprises such as Jiangsu Changjiang Electronics Tech Co., Ltd. and Jiangsu NewHeadLine Development Group Co., Ltd. successively filed for the issuance of foreign debts, more than US$1.3 billion in value.

vi) Stable performance of foreign-funded enterprises. In 2015, the total import and export value of foreign-funded enterprises in Jiangsu reached US$335.856 billion, accounting for 61.6% of the province’s total, including US$193.021 billion in export and US$142.835 billion in import. Equipment import by foreign-funded enterprises totaled US$2.797 billion, an increase of 9.2% year-on-year, up 25.8 percentage points over 2014. Foreign-funded enterprises entered a new stage of investment in Jiangsu. They paid RMB272.017 billion of taxes, up 5.1% year-on-year, indicating that their business performance was good despite unfavorable macroeconomic conditions. Among the 52 key foreign-invested enterprises in Jiangsu, 29 performed well and achieved year-on-year increase in mam operating income in 2015, accounting for 55.8% of the total; 10 enterprises saw a slight decrease year-on-year in main operating income and normal operating conditions, accounting for 19.2% of the total. Six enterprises’ annual main operating income exceeded RMB10 billion, or 11.5% of the total; they are Dongfeng Yueda Kia Co.. Ltd. in Yancheng (RMB47.8 billion), ASUS (Suzhou) (RMB43.2 billion), Changzhou Trina Solar Energy Co., Ltd. (RMB23.2 billion), Changan Mazda Automobile Co., Ltd. (Nanjing) (RMB 19.4 billion), BSH Hausgeräte GmbH (Nanjing) (RMB17.5 billion), and SK Hynix (Wuxi) (RMB11.2 billion).

2) OVERSEAS INVESTMENT

In 2015, Jiangsu implemented the BRI and accelerated international capacity cooperation while deepening the reform of its overseas investment management system to enhance the facilitation for its enterprises’ overseas investment. Its overseas investment grew rapidly, with a growing number of large projects and private enterprises investing in BRI countries, mainly in the secondary and tertiary industries. A total of 879 overseas investment projects were approved (filed) in 2015, up by 19.4% year-on-year, involving a total contractual outward investment of US$10.3 billion, an increase of 42.8% year-on-year.

i) Higher /eve/ of overseas investment. In 2015, the average investment amount of Jiangsu enterprises' overseas investment projects reached US$12.12 million, an increase of US$1.79 million over 2014. Overseas M&A was rather active in 2015, with 170 new M&A and equity participation projects, and a total contractual outward investment of US$2 billion, up by 54.6% and 81.2% respectively, accounting for 19.3% and 19.4% of the province’s total respectively. Non-trade overseas investment grew rapidly. Specifically, the province’s contractual investment from the Chinese side in overseas processing trade projects and resource development projects increased by 94.1% and 225.4%, accounting for 10.9% and 7.2% of the province’s total respectively. A number of major projects were successfully implemented. Suning.com paid US$2.2 billion to acquire additional shares in Alibaba Group, and it was the largest overseas M&A project of Jiangsu Province in 2015. Jiangsu Delong Nickel Industry Co., Ltd. invested US$929 million in a 600,000-ton ferronickel smelting project in Indonesia and Jiangsu Changjiang Electronics Technology Co., Ltd. paid US$780 million for the acquisition of STATS ChipPAC Ltd., a listed company in Singapore. A number of similar major projects were filed with the National Development and Reform Commission.

ii) Rapid growth of outward investment in the secondary industry. In 2015, the contractual outward investment of Jiangsu Province’s secondary industry increased by 51.9% year-on-year, up 44.5 percentage points over 2014, accounting for 37.7% of the province’s total, up 3.6 percentage points over 2014. Specifically, the contractual outward investment in the mining industry and the construction industry grew by 180.5% and 155.3% year-on-year respectively. Within the manufacturing industry, the contractual outward investment in non-ferrous metal smelting, general equipment manufacturing, electrical equipment and machinery manufacturing, and communications and computer equipment manufacturing increased by 818.6%, 275.4%, 312.8% and 92.1% year-on-year respectively. Competitive industries of Jiangsu Province stepped up their efforts to go global. The tertiary industry contributed greatly to Jiangsu’s overseas investment with its outward investment accounting for 61.1% of the province’s total, mainly in the wholesale and retail sales industry, leasing and business services and real estate, who together contributed 52% of the province’s total contractual overseas investment.

Hi) Asia being the main destination for going-global. In 2015, Jiangsu enterprises invested in 468 projects in Asia, with a total contractual outward investment of US$5.95 billion, an increase of 21.9% and 43.4% over 2014, accounting for 53.2% and 57.7% of the province’s total respectively. The province’s contractual investment in Latin America, Oceania and North America increased by 133.3%, 63.4% and 54.5% respectively, accounting for 11.4%, 6.9% and 12.4% of the total respectively.

Regional investment analysis report 2015 97 tv) Northern Jiangsu leading the growth. In 2015, contractual outward investment by enterprises in northern Jiangsu reached US$1.79 billion, an increase of 162.3% year-on-year, 119.5 percentage points higher than the figure of the province as a whole. Noilhem Jiangsu thus contributed 17.4% of the province’s total outward investment, an increase of 6.5 percentage points over 2014. The contractual outward investment from Yancheng, Xuzhou, Huai’an and Lianyungang grew by 212.4%, 196.3%, 116.9% and 111.5% respectively. Southern Jiangsu is the province’s main area for capital outflow, and the number of overseas investment projects of this region reached 647, an increase of 23.2%, accounting for 73.6% of the province’s total. The contractual outward investment registered US$6.83 billion, a year-on-year increase of 29.5%, accounting for 66.3% of the province’s total. The contractual outward investment from central Jiangsu reached US$1.68 billion, a year-on-year increase of 33.6%, accounting for 16.3% of the province’s total. Private enterprises played an important role in outward investment. In 2015, a total of 693 overseas projects were invested in by private enterprises, with a total contractual outward investment of US$7.95 billion, accounting for 78.8% and 77.2% of the province’s total respectively. Smooth progress was made in the acquisition of factories affiliated to Advanced Micro Devices by Nantong Fujitsu Microelectronics Co., Ltd. with an outward investment of US$378 million.

  • (3) Investment in and from BRI countries in 2015
  • 1) INVESTMENT OF BRI COUNTRIES IN JIANGSU PROVINCE

In 2015, enterprises in BRI countries invested in 201 projects in Jiangsu Province, a decrease of 11.45% year-on-year. New contractual foreign investment reached US$2,012 billion, up by 21.3% year-on-year. The actual use of foreign capital was US$1,295 billion, down 14.16% over the previous year, accounting for 11.18%, 7.93% and 7.27% of the province’s total respectively. Specifically, the actual use of foreign capital in the manufacturing industry, mainly the manufacturing of communications equipment, computer and other electronic equipment, general equipment and chemicals, accounted for 56.8% of the total investment from BRI countries. The actual use of foreign capital in the service sector accounted for 41.6% of the total, mainly in the wholesale and retail sales industry, real estate, transportation, warehousing and postal services.

In 2015, Singapore, Malaysia, Indonesia, Poland and India were the top five BRI countries that invested in Jiangsu Province, and the actually utilized foreign capital was US$704 million, US$360 million, US$92 million. US$41 million and US$20 million respectively.

2) JIANGSU'S INVESTMENT IN BRI COUNTRIES

In 2015, Jiangsu province invested in 187 projects in BRI countries, with a total contractual outward investment of US$2.73 billion, up by 23.0% and 98.8% respectively, accounting for 21.3% and 26.5% of the province’s total, an increase of 7.5 percentage points over 2014.

Indonesia, Pakistan, Thailand, Malaysia and Singapore are the five BRI countries that received the most investment from Jiangsu, taking more than 60% of the province’s total investment in BRI countries. Mongolia, Kazakhstan, Malaysia, Uzbekistan and Russia are the top five BRI countries that witnessed the fastest growth of investment from Jiangsu, up by tenfold or even hundredfold over the previous year.

3) OVERALL PLAN AND IMPORTANT MEASURES FOR THE

DEVELOPMENT OF AN OPEN ECONOMY IN 2016

In developing an open economy, in 2016, Jiangsu aims to increase export and import and maintain stable actual utilization of foreign capital while increasing the contractual outward investment by more than 10%.

Jiangsu Province made its 2016 overall plan for reform and the development of an open economy according to the guidelines of the Central Economic Work Conference and the economic work conference of Jiangsu Provincial People’s Government, as well as the major decisions of the central government and the CPC Jiangsu Provincial Committee and Jiangsu People’s Government. Focusing on opening-up and development, striving for "three internationalizations,” Jiangsu Province set out to expand opening-up toward other regions in China and toward the outside world, promote the integration of “bringing in” and “going global,” actively contribute to the implementation of the BRI and the development of Yangtze River Economic Belt, and enhance cooperation on international production capacity and equipment manufacturing. It would also strive to improve the quality and efficiency of relevant platforms for further opening-up and build a new pattern of opening-up, striving to make fresh progress in opening-up through the new breakthroughs in open economy.

i) Action plans to fully promote international capacity cooperation. Jiangsu Province will focus on international capacity cooperation to contribute to the BRI, further improve and implement relevant working mechanisms, strengthen management services for overseas cooperation parks and major projects, and support competitive enterprises who are willing to "go global,” and explore the international market.

First, Jiangsu Province will focus on major projects and industrial parks. Relevant provincial and municipal authorities must improve the project database for international capacity cooperation, accelerate the progress of major industrial park projects and other projects. Bringing into play the functions of the coordination mechanism between the provincial party committee and provincial people’s government and the bilateral capacity cooperation mechanisms, Jiangsu Province will promote matchmaking activities, strive to get key overseas investment projects into the national project database and obtain support in terms of funding, taxation and finance from the national level.

Second, Jiangsu Province will pay attention to mechanisms and coordination. It will hold the first meeting under the joint meeting mechanism for international

Regional investment analysis report 2015 99 capacity cooperation, make clear its key tasks of the year, coordinate and promote the construction of major projects and overseas industrial zones. It will formulate a three-year action plan for international capacity cooperation, study and formulate guidelines concerning the policies and plans of key countries and make clear its objectives, tasks and responsibilities.

Third, Jiangsu Province will pay attention to services and actions. It will work to provide sound services to enterprises, industrial parks and projects, coordinate and strengthen the construction of the comprehensive seivice system for overseas investment and effectively integrate the information resources of governments, enterprises, chambers of commerce and associations, financial institutions and intermediary sendee organizations at all levels to build a comprehensive sendee platform for information conununication.

ii) Focusing on main tasks to study key issues. The 13th Five-Year Plan period is a crucial period for Jiangsu Province to transform its import and export and improve the overall quality, maintain stable growth of foreign capital utilization, grasp the opportunity to increase the quantity of outward investment and the quality of going-global efforts, and strive for innovation-driven development and transformation and upgrading of its development zones. Therefore, the Jiangsu Provincial Commission of Development and Reform will cany out research on further opening-up and foster new advantages in international competition in the economic new normal, produce research reports and studies on foreign trade, foreign investment, going-global and development zones, proposing core views and policy recommendations for the provincial party committee and provincial people’s government.

in) Seizing development opportunities to speed up the transformation and upgrading of development zones. Jiangsu Province will pay close attention to development zones and report it to relevant departments. It will support the National Development and Reform Commission in the revision of the catalogue of approved development zones in China, complete the preliminary review and related work on the development zones in Jiangsu Province and strive to get more development zones into the national catalogue. While promoting the transformation, upgrading and innovation-driven development of development zones, Jiangsu Province will advance the application for and construction of national transformation and upgr ading demonstration development zones in the Yangtze River Economic Belt, support eligible development zones in the province to upgrade to national development zones and work for the establishment of new development zones and the expansion of and plan adjustment for existing provincial development zones, actively supporting the integration and optimization of special customs zones. Jiangsu Province will support the comprehensive opening-up and innovation experiment in the Suzhou Industrial Park, encourage Kunshan Deepen Cross-strait Industrial Cooperation Experimental Zone and the Taiwan-funded enterprises industrial transfer cluster service demonstration area in Huai’an to deepen industrial cooperation with Taiwan enterprises while supporting the construction of cooperative industrial parks such as the China-ROK Industrial Park in Yancheng.

iv) Adopting new concepts and patterns to use preferential funding abroad. In 2016, following national and provincial economic and social development plans and strategic priorities, Jiangsu Province will focus on ecological and environmental protection, pollution prevention and control, poverty alleviation and development, new urbanization, the integration of medical and health services, vocational education, energy conservation and emission reduction, and modem agriculture; actively engage in the organization, planning and declaration of overseas lending projects of the year; and work to promote the combination of introducing capital, technologies and professionals. It will deepen the reform of the filing system of foreign debt management, strive to land the pilot reform for lump-sum foreign debt management in the province, and actively support enterprises with good credit standing and strong solvency to issue bonds abroad according to national industrial policies and local development strategic priorities. In particular, the raised funds will be mainly invested in projects in line with major national strategies like the BRI, international capacity cooperation and the development of the Yangtze River Economic Belt, as well as major projects with a strong driving force and good social and economic benefits in the fields of transportation infrastructure, new urbanization, strategic emerging industries, information science and technology, environmental protection and modern logistics.

 
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