Home Business & Finance
(1) Recent policies of Jiangxi to promote inward and outward investment
Jiangxi has issued a series of relevant policies including the Guiding Opinions on Accelerating the Implementation of Going Global Strategy (GFF  No. 25), the Opinions on Expanding Opening up Across the Board and Accelerating the Development and Upgrading of an Open Economy (GF  No. 9), the Circular on Special Actions for Reducing Enterprise Cost and Improving Development Environment (GZ  No. 22), the Circular on Issuing the Plan for the Division of Responsibilities of Provincial Departments for Expanding Opening up Across the Board and Accelerating the Development and Upgrading of an Open Economy (GBZ  No. 27), the Opinions of the People’s Government of Jiangxi Province on Deepening the Reform of the Investment System in an All-round Way (GFF  No. 23), the Circular on Issuing Some Measures for Promoting Stable Economic Growth (GFF  No. 26), the Implementation Plan for Jiangxi Province to Participate in the Development of the Silk Road Economic Belt and the 21st Century Maritime Silk Road (GFTZ  No. 47), the Key Points for Jiangxi Province to Participate in the Development of the Silk Road Economic Belt and the 21st Century Maritime Silk Road in 2015 (GFTZ  No. 47), and the Implementation Plan for Accelerating the Integration into the Belt and Road Initiative and Encouraging Jiangxi Enterprises to Participate in International Cooperation (GFF  No. 50).
Utilization of foreign capital: In 2015, there were 640 new foreign-invested enterprises in Jiangxi, down 22.1%; the foreign investment actually used was USS9.47 billion, an increase of 12.1%. A total of 2,158 projects were introducedfrom outside the province, up 0.3%; involving US$523.22 billion of investment, up 15.2%. Specifically, 1,387 were major projects worth more than USS100 million, up by 4.3%; the foreign capital actually used in these projects registered US$465.4 billion, up 19.8%.
Overseas investment: In 2015, the total turnover of overseas projects contracted by Jiangxi enterprises reached US$3.51 billion, up 23.1%; there were 110 overseas investment enterprises approved in the whole province. The total OFDI increased by 59.9% to US$1.05 billion.
2) STRUCTURE OF INWARD AND OUTWARD INVESTMENT
Utilization of foreign capital: First, remarkable results were achieved in attracting large and strong investors to form and develop industrial clusters. In 2015, Jiangxi welcomed three Fortune Global 500 enterprises and 11 Top 500 enterprises of China. The result was an increasingly obvious industrial agglomeration effect. Mainly concentrated in the secondary industry, these projects attracted 73.5% of foreign investment and 70% of out-of-province funds. The proportion of foreign investment in the primary, secondary and tertiary industries in the province was 5.9%, 73.5% and 20.6% respectively. Second, major countries and regions have maintained stable investment in Jiangxi. The top 10 countries/ regions investing in the province remained unchanged, and the total foreign investment actually used registered US$9,015 billion, accounting for 95.2% of the total, of which investment from the Hong Kong SAR and Taiwan, China, made up 80.1% and 5.6% of the total respectively. Third, the structure of foreign investment was further improved. The sendee sector saw a significant growth with 328 projects over RMB100 million in value introduced from outside the province, 39 more than the previous year, and the actual investment amounted to RMB115.409 billion, an increase of 31.7%, and represented 24.8% of the total, up by 2.25 percentage points. In the manufacturing industry, the proportion of investment in the high-tech manufacturing industry increased. To be specific, investment in the electronic information industry accounted for 7.1% of the total, up 0.3 percentage point, and the biomedicine industry contributed 4.2%, up 1.1 percentage points. Fourth, foreign-invested enterprises eagerly increased their capital. A total of 175 foreign enterprises in the province increased their capital, with contractual foreign investment up to US$1.86 billion, and 54 enterprises saw increases of more than US$10 million with contractual investment up to US$1.2 billion.
Overseas investment: First, the scale of overseas project contracting increased rapidly. The value of new contracts signed in the year was US$4.04 billion, up 52.6%, and the total turnover jumped to eleventh place in China and second in Central China. China Jiangxi International Economic and Technical Cooperation Co., Ltd., Zhongding International Construction Group Co., Ltd. and Zhongjing Engineering Group Limited were successively shortlisted as the world’s Top 250 international contractors, ranked 112th, 129th and 142nd respectively. With this, Jiangxi ranked third in China and first in Central China
Regional investment analysis report 2015 175 in terms of the number of local enterprises entering this list. Second, overseas investment rose sharply. In 2015, Jiangxi achieved a total of US$1.05 billion of non-financial outward direct investment in 54 countries and regions. Third, new progress was made in the construction of overseas economic and trade cooperation zones. Four such zones, namely Chinese Center for Promotion of Investment Development and Trade (Zambia) Ltd. constructed by China Jiangxi International, HuaJian International Light Industry City (Ethiopia) PLC, Modern Agricultural Technology Industrial Park proposed by Jiangxi Huamei Foods Industrial Co., Ltd., and China-Russia International Trade City constructed by Zhongge Group were included in the statistics of the Ministry of Commerce of China.
3) PROBLEMS IN INWARD AND OUTWARD INVESTMENT
Utilization of foreign capital: First, the number of new projects and new contractual foreign investment in Jiangxi Province saw a continuous decline which had a great influence on the future trend of utilization of foreign capital. Second, the province faced a severe shortage of cash investment, and the cash ratio in foreign investment kept falling. Both the amount and the share of cash foreign investment are dangerously low and lower than the figures of Hunan, Hubei and many other provinces. The main reason lies in the lack of introduction of and progress in large-scale projects. Third, foreign-invested enterprises, especially small and micro ones, generally face a shortage of land, insufficient labor resources and difficulty in financing. According to calculation, nearly 80% of foreign investment projects at the county level found it hard to secure land to actually launch construction. Therefore, it is necessary for the province and relevant cities to balance land resources for project construction. In addition, as Jiangxi mainly took over labor-intensive industries such as electronics, light industry, textiles, clothing, shoes and hats, etc., a large amount of labor is needed. However, with 7 million people working outside the province, it was difficult for enterprises to hire skilled workers, and factories may remain out of operation as a result. Moreover, in the aftermath of the financial crisis, poor liquidity and changes in the direction of investment flow had impacts on the construction of foreign capital projects and the production of relevant enterprises.
Overseas investment: First, the risk is high. At present, with aggravated political unrest in Europe, the Middle East, North Africa and other regions, the global situation is becoming more and more complicated, and Jiangxi's resource development projects overseas face great risks. Moreover, developed countries launched stricter examination for investment from China, causing uncertainties for Jiangxi’s overseas M&A projects. Second, there are few information acquisition channels. Due to a shortage of overseas investment management personnel and experience. Jiangxi enterprises can only rely on themselves or their partners to gain effective information about overseas investment in the mineral resources industry. At the same time, the lack of in-depth understanding of the laws andregulations, investment conditions, religious belief, customs and partners of the destination countries also brings difficulties and risks to the investment projects. Overseas investment and resources development are highly complex activities that require knowledge and skills of technology, production, foreign languages, international law, international finance, international trade and religious belief, as well as practical work experience abroad. Such interdisciplinary talents good at operation and management are in acute shortage in Jiangxi, which impedes the development of local enterprises abroad. Third, it is difficult to secure funding. Some overseas resource development enterprises lack economic strength and are unable to provide sufficient funds for the follow-up construction of their overseas projects. In China, because of credit guarantee, it is very difficult for enterprises to solve this problem on the capital market and through financing loans; due to lack of credit records, it is also difficult for enterprises to secure financing in the host country of their projects.
4) PROSPECTS FOR 2016
Utilization of foreign capital: First, Jiangxi will continue to improve its foreign investment environment. The lasting effects of campaigns started by Jiangxi to improve the conduct of officials every year will help further improve the service environment and service quality. Review and approval procedures for foreign investment projects will be handled through green channels. Major projects will be reported and discussed at meetings of the provincial government for better coordination, and given priority in such aspects as land use, employment, power utilization and financing. Second, Jiangxi will actively build a good platform for attracting investment. By fully utilizing a series of major investment promotion events including the China International Import Expo, Jiangxi (Hong Kong) Week for Investment Promotion, Jiangxi (Taiwan) Activity Week, Jiangxi-Taiwan Economic and Trade Cooperation Seminar, Overseas Chinese and Ethnic Chinese Investment and Entrepreneurship Fair, the 12th Pan Pearl River Delta (PPRD) Regional Cooperation & Development Forum and Economic & Trade Fair, China International Fair for Investment & Trade, and Jingdezhen International Ceramic Fair, Jiangxi will make every effort to attract investment with a focus on major infrastructure, the photoelectric industry, new energy, automotive manufacturing and spare parts, biomedicine and new medicine, deep processing of tungsten and rare earth and 10 other major industries. Third, focusing on key industries, such as the Poyang Lake Ecological Economic Zone and the revitalization of the former Central Soviet Area in southern Jiangxi, the province will make further efforts to attract investment, and go all out to take over the capacities transferred from in and out of China. It will seize the rare opportunity of the accelerating international industrial transfer, do frill justice to the Hong Kong SAR's advantages as the main source of FDI in Jiangxi and a renowned brand in foreign investment attraction, and concentrate on undertaking modern services such as finance, logistics, software and service outsourcing transferred from there. Considering the strong advantages of Taiwan, China, in
Regional investment analysis report 2015 177 emerging industries, Jiangxi will give priority to taking over capacities from Taiwan’s electronic information, new materials and other emerging industries. In view of the advantages of Europe and the United States in developed real economies, focus will be placed on automobile parts, deep processing of nonferrous metals and high-tech industries in taking over capacities from those places. In particular, Jiangxi will prioritize contact with Fortune Global 500 companies and other multinational companies and introduce leading projects to make progress in investment attraction.
Overseas investment: First, Jiangxi will carefully study the overseas investment environment. Guided by China’s overall country- and industry-specific policies for outward investment, Jiangxi will step up its efforts to push its advantageous and leading enterprises in key industries, especially large state-owned enterprises abroad to make investment, and encourage and support private enterprises to go global. Second, the province will strengthen coordination, and improve the overseas investment information reporting mechanism. To this end, Jiangxi will strengthen the inter-departmental coordination mechanism, improve the promotion system, and enhance the macro-guidance and services in connection with the going-global strategy, so as to help enterprises grasp and understand the political, legal and investment environment in destination countries in a timely maimer, and effectively forestall and defuse related risks. It will further the contact and communication with Chinese embassies and consulates abroad, and strengthen the information feedback on and the statistical system for overseas investment activities, so as to provide authoritative and reliable information on overseas market demand, investment environment, laws and regulations, and corporate credit, and promote the healthy development of overseas investment activities. Third, the province will strive for policy support and financial support. Jiangxi will keep close contact with the National Development and Reform Commission, the Ministry of Finance and other ministries and commissions to strive for funding from the national level, and actively promote the establishment of special funds for provincial-level overseas investment. It will strengthen coordination and communication with relevant policy banks and insurance institutions, such as the China Development Bank Jiangxi Branch and the Export-Import Bank of China Jiangxi Branch, and give preferential financial and insurance support to encouraged outward investment projects in line with the province’s overseas investment plan and industrial orientation, so as to solve the long-standing difficulties in overseas investment and financing. Fourth, the province will work harder to provide better services for creating a more relaxed environment for the implementation of the opening-up strategy. Jiangxi will establish and improve an overall planning and promotion mechanism for its major projects by drawing support from the relevant meetings at the provincial level and other promotion mechanisms, so as to ensure the supply of major production factors and push key projects forward. The province will further promote investment facilitation. It will improve the parallel approval service model, implement online review and approval of foreign investment in an allround way and simplify the approval process. With these, the approval efficiencywill be improved. The province will improve the logistics conditions and develop a large port logistics system by putting more efforts into the construction of the air cargo hub project at Nanchang Changbei International Airport, expedite the establishment of Jiujiang Bonded Port Area, and running more chartered freight trains for railway-sea intermodal transportation.
First, in terms of agricultural investment, Jiangxi promoted key projects like the agricultural technology demonstration center and agricultural comprehensive development project of Jiangxi Ganliang Industrial Ltd. in Equatorial Guinea, and the vegetable greenhouse project of Jiujiang Ows Building Materials Co., Ltd. in Ufa, Russia. Second, in terms of cooperation in mineral resources development, Jiangxi pushed forward the copper mine project developed by Jiangxi Copper Corporation Limited and a local partner in Turkey, and the nickel and cobalt mine project developed by Jiangxi Tungsten Holding Group in cooperation with MT of Turkey. Third, in terms of energy cooperation, Jiangxi made progress in the construction of solar cell assembly production line of Jinko Solar in Penang, Malaysia, and two 2*55MW coal-fired power plant projects in Pakistan by Jianglian Heavy Industry Group Co., Ltd., etc. Fourth, in terms of advanced manufacturing cooperation, centered on the innovation-driven industrial upgrading and the improvement of international competitiveness of relevant industries, Jiangxi pushed forward the cooperative light and small civil helicopter production project between Jiangxi Changxing Aviation Equipment Co., Ltd. and an Italian company and the M&A project of Philips Lumileds by Lattice Power (Jiangxi) Corporation.
2) INVESTMENT IN BRI COUNTRIES
Jiangxi’s direct investment in 30 BRI countries and regions totaled USS640 million, an increase of 251%. Jiangxi signed USS598 million of contracts for projects in 25 BRI countries, six times over the previous year. From January to November 2015, Jiangxi's overseas contracted projects achieved a turnover of US$3,007 billion, with 73 new projects above US$5 million in value and a total contractual amount of US$2,535 billion. In 2015, the province arranged 38 economic and trade cooperation events in the BRI countries, and organized more than 300 enterprises to explore BRI markets, bringing Jiangxi products to all these countries.
3) PROSPECTS FOR 2016
In 2016, while acting upon the Implementation Plan for Jiangxi Province to Participate in the Development of the Silk Road Economic Belt and the 21st Century Maritime Silk Road and the Implementation Plan for Accelerating the
Integration into the Belt and Road Initiative and Encouraging Enterprises to Participate in International Cooperation, Jiangxi will accelerate its integration into the efforts to implement the BRI, and promote the construction of a number of strategic channels, the completion of a number of cooperation platforms, and the effective operation of a number of cooperation mechanisms. In addition, it will deepen overseas cooperation exchanges, make preliminary achievements in a group of major cooperation projects, and manage to mobilize the whole province to participate in the implementation of the BRI.