Desktop version

Home arrow Business & Finance

  • Increase font
  • Decrease font


<<   CONTENTS   >>

Sichuan

(1) Inward and outward investment of Sichuan in 2015

In 2015, in the face of the complex and austere situation in which the downward pressure on the international and domestic economy continued to increase and the arduous and heavy task of domestic reform, development and stability, Sichuan Province earnestly put into action the decisions and arrangements of the CPC Central Committee and the State Council for stable growth. Remaining committed to the underlying principle of pursuing progress while ensuring stability, Sichuan actively adapted itself to the new normal of economic development, and made active efforts to build itself into a strategic hub and core area for the combined development of the BRI and the Yangtze River Economic Belt and speed up the development of a strategic commanding height for the open-ing-up of the inland areas of China by virtue of the national pursuit for expansion of inland opening-up, opening-up along the Yangtze River, opening-up along the borders and the implementation of the strategy to open up toward the west. With these Sichuan made new achievements in building an open economy.

1) UTILIZATION OF FOREIGN CAPITAL

In 2015, the foreign investment utilization in Sichuan remained stable at around USS10 billion, with an actual amount of investment amounting to US$10,437 billion, of which FDI was US$10,066 billion and contractual investment was

US$3.64 billion, an increase of 20.5%. There were 319 new foreign-invested enterprises, up 13.93%; and the foreign preferential loans utilized totaled US$17.661 million. Financial aid from the Hong Kong SAR and the Macao SAR registered US$194 million.

The driving forces of foreign investment on the economy diversified. In 2015, 34 countries and regions set up new enterprises in Sichuan, and enterprises from 22 countries and regions had actual investment in the province. The Hong Kong SAR, Singapore and Taiwan, China, took dominating positions and their investment combined accounted for 80.8% of the total foreign capital utilization of the province, including US$6.707 billion from the Hong Kong SAR. European countries, such as the United Kingdom, France, Germany and Italy, witnessed hikes in their investment in Sichuan. Specifically, Germany’s investment increased by 748.3 times, the Netherlands’ by 14.7 times and Italy's by 5.7 times. The US investment in Sichuan stood at US$112 million, down by 48.5% year-on-year along a downward path, but the contractual investment from the US registered US$203 million, an increase of 62.3%.

The industrial distribution of foreign investment remained relatively stable. In 2015, the service sector actually utilized US$5.3 billion of foreign capital, accounting for 52.7% of the total, and the contractual investment in the sector amounted to US$2.23 billion, accounting for 61.3% of the total. The service sector, therefore, remained in the leading position. The foreign investment actually used in the real estate industry was US$3.94 billion, representing 74.3% of the total in the sendee sector. Wholesale and retail sales, leasing and business services, information transmission, computer services and software became the focus of foreign investment, with the number of new enterprises standing at 69, 59, and 36 respectively, making up more than half of the total approved throughout the year. The utilization of foreign investment in manufacturing remained stable, with the actual utilization of foreign capital standing at US$3.312 billion, down 4.36%, and the contractual investment at US$1.016 billion, down 3.35%.

Prior work is in progress for the post-disaster recovery and reconstruction project in areas stricken by the April 20, 2013, Lushan earthquake, funded by foreign preferential loans. The Agence Française de Développement (AFD) already started granting funds and technical aids and working to refine the feasibility study report. The post-earthquake reconstruction project in Lushan funded by World Bank loans started its official assessment. The Saudi Fund for Development and Kuwait Fund project saw the feasibility study report completed. The general loan project progressed smoothly. The Sichuan small town development project and Wudu diversion irrigation project (Phase II) supported by World Bank loans progressed faster. Negotiation was completed with agreements for the World Bank loans to support infrastructure construction for Guang’an Sichuan-Chongqing cooperation demonstration zone project and the Phase VI poverty alleviation project in Sichuan. Both projects were officially implemented. The procurement for the project of Neijiang Vocational & Technical College and the Third People’s Hospital of Guangyuan financed by Israeli government loans was completed. The Chengdu Seventh People’s Hospital

Regional investment analysis report 2015 197 project financed with German promotional loans commenced the bidding process. The Ziyang Third People’s Hospital Project financed with OFID loans entered into the phase of third-party evaluation and feasibility study. The enthusiasm of enterprises to borrow international commercial loans continuously rises, and enterprises such as New Hope Group and Sichuan Airlines received USS 150 million of commercial loans.

2) OVERSEAS INVESTMENT

In 2015, Sichuan’s outward investment and cooperation continued to show momentum for rapid development, and the enthusiasm of enterprises to go global was enhanced. Up to 145 new enterprises made overseas investment, an increase of 10.7% year-on-year. Investment from the Chinese side in projects filed with provincial authorities totaled US$2.83 billion, up 2.2 times year-on-year. There were 29 overseas investment projects filed with the development and reform departments, with a total outward investment of US$1,568 billion, up 84.5% year-on-year. M&A was still the main form of overseas investment adopted by Sichuan enterprises, and most investors were private enterprises. For example, New Hope Group, Kelun Industry Group, Tianqi Lithium and other enterprises took overseas investment as an important means to expand development space and build competitiveness. In terms of industrial distribution, energy and power, medicine, chemical industry, agriculture, game development, film and television, and culture are attracting more and more attention from enterprises.

Overseas project contracting developed in an orderly manner. In 2015, Sichuan enterprises realized a turnover of US$5.46 billion, and a new contractual investment of US$4.53 billion, up 25.1%. Key projects such as the 1-millionkilowatt thermal power project of China Chengda Engineering Co., Ltd. with an investment of US$1 billion in Indonesia, the US$250 million coal power plant project of Western Power in Pakistan, the Belarusian rail transit capacitor project of Chengdu Road & Bridge Machinery Co., Ltd., and the hydropower project of Dongfang Electric Corporation in Laos were all in smooth progress. In the meantime, the contractual investment of new overseas projects in BRI countries totaled US$2,269 billion, accounting for 50% of the total. Projects including the Moscow-Kazan high-speed railway project of China Railway Eryuan Engineering Group Co., Ltd., the thermal power project of Dongfang Electric Corporation in Bosnia and Herzegovina, the city overpass project of Ranken Railway Construction Group Co., Ltd. in Chittagong, Bangladesh, and the China-Laos railway project of China Railway No. 2 Engineering Group Co., Ltd. were all progressing in an orderly way.

  • 3) PROBLEMS
  • i) Gap with East China in foreign investment utilization widened. The growth of foreign investment utilization in Sichuan has encountered bottlenecks. Theactual foreign investment in Sichuan has been hovering around US$10 billion in recent years, mainly due to the lack of large projects and new growth points. In particular, the growth of foreign investment in the manufacturing industry has been sluggish, and the real estate industry which had been receiving a large proportion of the investment has also witnessed a decline. Investment from the Hong Kong SAR, Singapore, Taiwan of China, the United States and other traditional sources has experienced a decline to varying degrees, and new important sources have not yet appeared. Although the investment from some countries is increasing rapidly, the overall scale of foreign investment utilization in the province is relatively small, and substantial gr owth is not likely in the short run.

ii) Lack of highlight in going-global. Sichuan enterprises have become more and more enthusiastic in going-global. Both the number of enterprises who have done so and the amount of investment they have made are on the rise, but some restrictive factors still exist. First, some enterprises still invest blindly and only pay attention to the project itself, not the overall industrial conditions and risk profile of the host countries. Second, most projects have a small investment scale, which is scattered in terms of both industry and country. Third, enterprises still go global alone, making it difficult to form synergy and guard against risks. This is why some projects progress slowly or even stagnate. Fourth, financial support is still too weak to enable private enterprises to be placed at the same financing position as state-owned enterprises. Fifth, limited by their own strength, information channels and cooperation methods, it is difficult for private enterprises to participate in major projects promoted and implemented at the national level.

(2) Progress in the implementation of the BRI

Since the BRI was proposed, Sichuan has seized the opportunity, made active moves to plan, set targets, establish mechanisms, and clarify ideas and key points for the promotion of relevant work to practically advance the BRI. With these, Sichuan achieved positive results.

First, the province paid attention to overall planning and establishing mechanisms. The Sichuan Provincial People’s Government set up a leadership group to promote the implementation of the BRI, established a sound working mechanism for the leadership group and its office, and pushed forward all key tasks in good coordination. The provincial departments and cities and prefectures have also worked out corresponding working mechanisms according to their actual conditions, thus forming a good vision under which all parties concerned jointly advance the BRI across the province. At the same time, according to the rolling mechanism of having one batch of projects in progress, one batch in reserve, and one batch being planned, the province established a key project database at the provincial level, and promotes work in all aspects based on it. Sichuan submitted more than 120 project proposals to the national authorities responsible for the implementation of the BRI, involving a total investment of over RMB1 trillion.

Second, Sichuan put the emphasis on key points and launched forceful measures. In accordance with national plans and requirements and in light of its actual conditions, Sichuan worked out an implementation plan for its participation in the BRI implementation. In addition, it put forward 24 measures from the perspective of road connectivity, economic and trade cooperation, industrial development, financial cooperation, people-to-people and cultural exchanges, and institutions and working mechanisms for opening-up, and formulated policies and measures such as "251 Three-Year Action Plan" for the BRI, Plan for the Manufacturing Industry to Participate in the BRI, and implementation plan for foreign affairs. To be stage-specific and pertinent in doing relevant work, the 2015-2016 Key Work Plan was formulated in detail. A further 46 priorities were identified for 2015 and are now proceeding in an orderly manner.

Third, the province emphasizes projects to promote cooperation. Centering on national plans, Sichuan, on the basis of projects, made great efforts to develop an Air Silk Road, build an international channel to and from Sichuan, and promote investment, trade and cultural exchanges. As a result, its exchanges and cooperation with the BRI countries and regions have continued to expand. The construction of Chengdu Tianfu International Airport commenced in an allround way, major railway and highway projects were further promoted; and a number of domestic and foreign industrials parks built through cooperation with Germany, France, the Republic of Korea and Singapore witnessed concrete progress. The China-Europe Railway and China-Asia Railway starting from Chengdu are in stable operation. The China-Europe railway (Chengdu line) extended from Lodz, Poland, to Nuremberg, Germany and Tilburg, Netherlands. By the end of June 2015, the China-Europe railway (Chengdu line) had run 334 round trips, making Sichuan one of the provinces in China to have run the largest number of China-Europe trains, playing an active role in encouraging Sichuan enterprises to participate in the international division of labor and the development of international markets. The number of foreign consulates in Sichuan reached 15, including eight of BRI countries. Additionally, it formed partnerships and launched cooperation with 207 cities across the world, and the province now flies a total of 89 international and regional air routes.

In 2015, the trade volume of Sichuan with BRI countries reached USS13.83 billion, and the contractual investment from BRI countries tripled; the turnover of projects contracted in BRI countries increased by 30%, accounting for 61.8% of the total; the province’s outward investment increased threefold to US$880 million.

(3) Major ideas for future work

Sichuan shall take the initiative to adapt itself to, comprehend and lead the new normal of economic development, make further efforts to break through the bottlenecks and stride over obstacles in the development of an open economy, and value the driving force of comprehensive innovation and reform. It shall move faster to enhance the depth and breadth of opening-up, deeply integrate itself into the international division of labor and cooperation, actively build itself into a strategic hub and core area for the coordinated development of the BRI and the Yangtze River Economic Belt, and speed up the building of a strategic highland for the opening-up of the inland areas of China.

1) CONTINUE TO TAKE OVER TRANSFERRED INDUSTRIES AS A

DIRECT WAY OF MAINTAINING STABLE GROWTH. ADJUSTING

STRUCTURE AND PROMOTING TRANSFORMATION IN SICHUAN

Sichuan will accelerate the development of high-end opening-up carriers such as the China-ROK Innovation & Entrepreneurship Park, the China-Germany Innovation Industry Cooperation Platform, and the China-France Chengdu Ecological Park, and work hard to build an important platform to undertake transferred industrial facilities. It will introduce a number of enterprises with global influence from Europe, America, Japan, the Repubhc of Korea, the Flong Kong SAR and Taiwan of China to carry out industrial and technological cooperation in key industries identified by the province. In line with its industrial advantages and development needs, Sichuan will continue to intensify investment attraction efforts in the eastern coastal areas of China, constantly explore new sources of investment, and attract large and high-quality foreign investment projects from key enterprises. The province will make great efforts to improve the environment for attracting foreign investment and pay more attention to the service for major projects.

2) GIVE TOP PRIORITY TO COOPERATION IN INTERNATIONAL

PRODUCTION CAPACITY AND EQUIPMENT MANUFACTURING IN

SICHUAN’S OVERSEAS ECONOMIC OPERATIONS

Taking the opportunity of the establishment of a commission-province collaboration mechanism for pushing forward international capacity cooperation between the National Development and Reform Commission and Sichuan Province, Sichuan will strive to participate in international capacity and equipment manufacturing cooperation, and regard it as the top priority in Sichuan’s going-global efforts. In combination with the industrial development basis, the status quo of advantageous surplus capacity and the target of structural adjustment, efforts are made to establish a demonstration province for cooperation in international capacity and equipment manufacturing cooperation in Central and West China. The province will further strengthen the overall coordination of international capacity and equipment manufacturing cooperation, formulate specific support and incentive policies, and accelerate the establishment of special financial funds. It will improve financial service support, and increase support and efforts to make breakthroughs in some key projects of international production capacity and equipment manufacturing cooperation in the province. Qualified enterprises will be encouraged to build overseas agricultural cooperation zones, food industry demonstration parks, medical and chemical industry clusters and energy and mineral industry clusters in BRI countries and some African countries. The

Regional investment analysis report 2015 201 province will increase communication and coordination with relevant ministries and commissions at the national level, and support Sichuan enterprises to take an active part in major international capacity cooperation projects promoted by the state and major equipment export projects in connection with railway and power facility construction initiatives.

 
<<   CONTENTS   >>

Related topics