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Qingdao

In 2015, in the face of a complex and changing external environment and mounting downward pressure on the economy, Qingdao thoroughly acted upon the messages conveyed at the 18th National Congress and the third, fourth and fifth plenary sessions of the 18th Central Committee of the Communist Party of China.

In accordance with the requirements of “looking for, setting and reaching targets, taking top positions, and creating standards” and “acceleration, promotion, innovation, efficiency and implementation,” as specified by the Municipal Party Committee and Municipal People’s Government of Qingdao, guided by the strategy to develop into an international city, Qingdao actively adapted itself to the new normal of economic development with a focus on deepening reform and promoting innovation. The utilization of foreign investment and the development of overseas investment in the city showed a good momentum, and made positive contributions to the overall economic and social development of the city.

In 2015, Qingdao steadily promoted the reform of its foreign investment approval and management system, expanded the field of opening-up, and continuously optimized the environment for foreign investment. As a result, the foreign investment attracted by the city increased steadily, and the quality of utilizing foreign investment was further improved. Besides, Qingdao took the initiative to participate in the implementation of the BRI, actively supported local enterprises to go global and put forth efforts to foster new advantages in going-global and bringing-in, as well as in two-way opening-up.

(1) Utilization of foreign investment

The scale of foreign investment in Qingdao reached a new high in 2015. There were 763 new foreign investment projects in Qingdao, up 23.26% year-on-year. Contractual foreign investment reached USS8.274 billion, up 39.81% year-on-year. The foreign investment actually used was US$6,691 billion, up 10.02% year-on-year, accounting for 41% of the city’s total. Main features are as follows:

1) CONTINUOUS IMPROVEMENT OF FOREIGN INVESTMENT

STRUCTURE

Qingdao made foil use of the policies for comprehensive wealth management reform pilot zones to attract foreign financial institutions and equity investment enterprises. In 2015, Korea Development Bank, Development Bank of Singapore and ANZ Bank settled in Qingdao; progress was made in projects of Beta Field Group in Hong Kong SAR, ISP Wealth Center in Italy and DP Investment Company in the UK; and China Merchants Group Industrial Park, with a total investment of US$298 million, settled down. During the 12th Five-Year Plan period, eight foreign banks were introduced to Qingdao, 28 by the end of 2015, accounting for 75% of the total, along with seven equity investment enterprises and two micro-loan companies. Both the Bank of Qingdao and Port of Qingdao got listed in the Hong Kong Stock Exchange, raising more than US$600 million and US$400 million of binds, respectively. Haier Healthwise Holdings Limited and Sino-German Ecopark were listed in the Hong Kong SAR and Germany respectively. In 2015, 17 new foreign-invested financial leasing companies were approved for establishment with a contractual investment of US$740 million. The total number of foreign-invested financial leasing companies reached 45 in the city, forming an initial agglomeration effect. In 2015, 36 foreign M&A projects were approved, with a transaction volume of US$210 million. During the 12th Five-Year Plan period, Qingdao approved 206 foreign M&A projects accumulatively. Specifically, Haier Group reached a strategic investment agreement with KKR, realizing foreign investment of USS518 million, and Alibaba held equity interest in Gooday Logistics and achieved foreign investment of US$250 million. The investment projects of Mapfre Insurance, 7-11, Toray Medical Co., Ltd., United Asia Finance Limited and Mitsubishi Heavy Industries Jieneng (Qingdao) Steam Turbine Co., Ltd. were all launched. By the end of 2015, 124 Fortune Global 500 companies invested in 224 projects in Qingdao. During the 12th Five-Year Plan period, the share of actual foreign investment in the service sector in Qingdao increased gradually, and the proportion of actual foreign investment in the three industries changed from 3.5: 52.8: 43.7 at the end of the 11th Five-Year Plan period to 3: 50: 47 at the end of the 12th Five-Year Plan period.

2) INNOVATION ON FOREIGN INVESTMENT MANAGEMENT SYSTEM

Shandong actively replicated and promoted the experience of the China (Shanghai) Pilot Free Trade Zone in its reforms. It lifted restrictions on financial leasing companies to engage in commercial factoring business related to their main business, and establish foreign-funded credit investigation companies and joint-stock foreign investment companies, and canceled the requirement for minimum registered capital for the establishment of subsidiaries. The factoring business was permitted for nine foreign-invested financial leasing companies, and several foreign-invested credit investigation companies and joint-stock foreign investment companies are moving toward the launch of their investment companies. In accordance with the Circular of the Ministry of Commerce on Canceling Follow-up Procedures after the Confirmation and Approval of Encouraged Foreign-invested Enterprises, Qingdao collaborated with the customs authorities to compare, sum up and file tax-free equipment import for 186 encouraged foreign investment projects in the city, involving a total investment of US$5.48 billion. To strengthen post-event supervision over foreign enterprises, it explored the establishment of an enterprise credit information platform, and joined hands with authorities of finance, statistics and taxation to establish a database of the production and operation of foreign enterprises. According to the statistics of foreign enterprises in the Joint Report on Annual Investment and Business Operations of Foreign-invested Enteiprises in 2015, the investment scale of existing foreign enterprises continuously expanded, with the total investment increased by 9.9% and the registered capital by 11.1%. The foreign-subscribed registered capital went up 10.1%, with the accumulative paid-in contributions to a single enteiprise registering US$3,227 million.

3) CONTINUOUS IMPROVEMENT OF THE BUSINESS ENVIRONMENT

The quality of services for foreign enterprises was improved in an all-round way by establishing a three-level linkage service system, improving the development

Regional investment analysis report 2015 147 environment of foreign-invested enterprises at city, district and sub-district (town) and economic park levels, thus realizing full coverage of all foreign enterprises. A “service ambassador” system and a contact and visit system for key foreign-invested enterprises were established under which government officials paid visits to more than 5,950 foreign-invested enterprises and solved through coordination more than 1,700 problems in connection with foreign exchange settlement, customs clearance, financing and employment in 2015. Also, it organized more than 400 activities covering foreign enterprise service training and bank-enterprise matchmaking.

4) FOREIGN-INVESTED ENTERPRISES PLAYED A SIGNIFICANT ROLE IN PROMOTING ECONOMIC AND SOCIAL DEVELOPMENT

So far, Qingdao is home to more than 6,700 foreign enterprises in operation. By the end of the 12th Five-Year Plan period, foreign enterprises created half of Qingdao’s export value, a third of its industrial added value, a third of its tax revenue and a quarter of new employment, and their role in promoting sustainable economic and social development in Qingdao strengthened further.

(2) Overseas investment

In 2015, all statistical indicators concerning foreign investment and economic cooperation of Qingdao reached a record high, showing a good trend of development. There were 185 overseas investment projects filed throughout the year, with contractual Chinese investment of US$3.3 billion, up 124.2% year-on-year, and actual Chinese investment of US$1.31 billion, up 21.2%. The contractual outward investment of new overseas projects stood at US$3.66 billion, an increase of 60.6%; and the turnover rose by 1.3% to US$3.64 billion. A total of 17,047 workers were dispatched for overseas labor cooperation, a rise of 30.1%. Main features are as follows:

1) HIGH GROWTH OF INVESTMENT IN BRI COUNTRIES

In 2015, Qingdao filed 87 investment projects in 23 BRI countries, with the contractual investment up by 141.4% to US$1.82 billion, accounting for 55.2% of the total. H&Shun International Holding Pte. Ltd. increased its investment by US$95 million, and Chinese investment totaled US$275 million. This was the largest investment by Qingdao in BRI countries.

2) STRONG GROWTH IN OVERSEAS INVESTMENT IN THE

MANUFACTURING INDUSTRY

Qingdao filed 54 new manufacturing investment projects, 10 more than in the previous year. Chinese contractual investment was US$1.21 billion with an increase of 252.2%, representing 36.7% of the total and involving a number offields including rubber and plastic products, electronic appliances, textile and clothing and mechanical equipment, marking an accelerated pace in international capacity cooperation. Sailun (Vietnam) Co., Ltd. increased USS 165 million of capital and China invested a total of US$260 million in tire production and rubber product R&D, making it the largest overseas investment project of Qingdao in manufacturing in 2015.

3) NEW BREAKTHROUGHS IN THE COOPERATIVE

DEVELOPMENT OF OVERSEAS RESOURCES

Qingdao Ruichang Cotton Industrial Co., Ltd. invested US$30 million in China-Africa Cotton Development Limited, making it the second largest cotton enterprise in Zimbabwe. Zhongqi Holding Group Co., Ltd. invested US$90 million in Zhongqi Overseas (Cambodia) Co., Ltd., which is engaged in the development of forest resources. Qingdao Jurong Oceanic Fisheries Co., Ltd., Qingdao Deep-Sea Fisheries Co., Ltd., Qingdao Luhaifeng Investment Co., Ltd. and three other enterprises set up dedicated companies to acquire overseas fishery resources.

4) RAPID GROWTH IN FOREIGN M&A INVESTMENT

Qingdao Haier Co., Ltd. successively acquired Indonesian, Vietnamese and Japanese enterprises, and Qingdao Hisense Electronics Co., Ltd. acquired Mexican and German enterprises. A total of 35 M&A investment projects were filed in 2015 and the Chinese investment involved was US$592 million, up 118.8% and 500.9% over the previous year respectively.

5) CONTINUOUSLY EXPANDING SCOPE OF OVERSEAS

PROJECT CONTRACTING

Qingdao had 199 overseas contracted projects under construction in 2015, 27 more than in the previous year. These involved many fields including housing construction, power, the petrochemical industry, transportation, water management projects, communications projects, industrial construction, manufacturing and processing facilities building, etc. SEPCOIII Electronic Power Construction Co., Ltd. signed two EPC contracts for new power projects with a total contract value of US$2.06 billion. Overseas project contracting expanded into the fields of surveying design services and investment operations.

6) NEW PROGRESS IN THE DEVELOPMENT OF OVERSEAS

LABOR COOPERATION MARKETS

Norway, Finland and Poland became new partners of Qingdao for labor cooperation, and thus the total number of European partner countries increased to nine. Workers dispatched abroad mainly worked as chefs. Qingdao’s seamen dispatch enterprises sent 10,578 people abroad, representing 62.1% of the total and setting a new record. Preliminary results were achieved in the development of the middle and high-end labor markets.

The year 2016 marks the beginning of the 13th Five-Year Plan period and the year of tackling deep-seated problems in structural reform. Qingdao will earnestly put into action the messages conveyed at the 18th National Congress and the third, fourth and fifth plenary sessions of the 18th Central Committee of the Communist Party of China, and conscientiously implement the work arrangement of the municipal Party committee and the municipal government. On the basis of the development concepts of innovation-driven, coordinated, green, open and shared development, it will focus on the implementation of the strategy to build itself into an international city in line with the national strategy of expanding opening-up and regional development, accelerate the construction of a new open economic system, and boost the two-way opening of “bringing in’’ and “going global” in an effort to make a good start in the 13th Five-Year Plan period.

 
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