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Qinghai

(1) Inward and outward investment in 2015

Under the active support and assistance of the CPC Qinghai Provincial Committee and the People’s Government of Qinghai Province, as well as the NDRC, Qinghai utilized foreign capital to firmly grasp the major historical opportunities of the implementation of the BRI, based itself on its own advantages, adhered to the combination of opening-up and deepened reform. It pursued opening-up both toward other regions of China and other countries of the world to make full use of domestic and foreign resources and markets, pushing the province’s foreign investment utilization and foreign economic cooperation up to a new level.

1) UTILIZATION OF FOREIGN CAPITAL

The province focused on the key directions of foreign government loans and carefully selected and planned foreign investment projects. In accordance with the spirit of the Circular of the National Development and Reform Commission and the Ministry of Finance on Issues Related to the Reform of the Management of Loans from International Financial Organizations and Foreign Governments

Regional investment analysis report 2015 231 (FGWZ [2015] No. 440), the province followed strictly the working procedures for foreign loan utilization, reviewed the feasibility study report of the medical equipment purchase project of Qinghai Provincial People’s Hospital with loans from the government of Israel, the feasibility study report of the Liupanshan poverty alleviation project of the International Fund for Agricultural Development (IFAD), and the feasibility study report of Xining greening and ecological protection project with loans from Germany. It also submitted the fund applications of these projects to higher-level authorities and actively communicated and coordinated with relevant parties to speed up the progress of these projects.

Meanwhile, according to the Circular of the National Development and Reform Commission and the Ministry of Finance on the Submission of Candidate Projects for Foreign Government Loans in 2015 (FGBWZ [2015] No. 2592), the province submitted the advanced medical equipment introduction project of the Fifth People’s Hospital of Qinghai Province with sovereign guarantee loans from the Export-Import Bank of the United States, the ecological and low-carbon greening project in Nanbei Mountains of Haidong with loans from the French Development Agency (AFD), and the farmland and water conservancy facilities project with loans from the Israeli govermnent. These projects involved a total of US$127 million of foreign loans.

In January 2015, Qinghai issued the Measures for Approval and Filing of Foreign Investment Projects in Qinghai Province. Within the year, the province approved eight new foreign investment projects and handled six capital increment projects. The total foreign investment was US$499,862 million, the total registered capital was US$240.6756 million, and the contractual foreign capital utilization stood at US$159,576 million. FDI mainly came from the Hong Kong SAR, New Zealand, India, the British Virgin Islands, and Malaysia, and the projects were in trade, catering, futures brokerage, bottled water production and sales, and photovoltaic power generation.

2) OVERSEAS INVESTMENT

In January 2015, Qinghai issued the Measures for Approval and Filing of Foreign Investment Projects in Qinghai Province. Within the year, the province approved 16 overseas investment projects, with an investment of US$1,042.8147 million and an actual investment of US$73.44 million in the United States, the United Arab Emirates, Afghanistan, Kyrgyzstan, Nepal, Malaysia, and Guinea. Relevant projects involved building materials manufacturing, hotel management, trade and other areas. Compared with 2014. the actual overseas investment increased by 260.18%.

In 2015, Qinghai completed a turnover of USS125.1 million in overseas contracted projects, with new contracts worth US$23.5 million. The projects, which covered the areas of expressway, housing construction, public utilities and power transmission and transformation, were mainly distributed in countries like Angola, Chad and Gabon. Compared with 2014, the turnover decreased slightly.

(2) Problems

First, the scale of foreign investment was small, and the regional distribution was unbalanced. The foreign capital absorbed by Qinghai Province accounted for a small proportion of the national total of China, and there was a large gap between Qinghai and the coastal provinces and municipalities in foreign investment attraction. Foreign capital had a weak driving force on the economy of the province. Foreign investment projects mainly concentrated in Xining, Haidong, and Haixi cities, with the southern part of the province largely left out.

Second, the quality of foreign investment is not high. From the perspective of investment sources, most of the overseas investors in Qinghai were small and medium-sized enterprises; no world-renowned multinational companies or mega-conglomerations were present here. Foreign investment projects were generally low-tech and the province did not have its brands and renowned products. Foreign investment failed to cluster along industry chains.

Third, the number of overseas investment enterprises was small, and so were their scale and business scope. Most of the enterprises engaged in overseas investment were private entities, whose operation and management as well as organizational structure were not so good, and there were not enough people in these enterprises who are familiar with international operation and management. The imperfect operation of overseas enterprises led to poor comprehensive competitiveness and low ability to guard against risks in overseas activities. Most enterprises had no ability to withstand uncertainties or work-related accidents. In addition, the incentives for overseas investment were insufficient, leading to a lack of effective promotion, supervision and services.

Fourth, the ability to attract and carry foreign capital is not strong. Qinghai Economic and Technological Development Zone is the main carrier of foreign investment projects in the province and foreign investment has always been a major task of the development zone. However, in the actual development process, the ability and level of foreign investment attraction was low.

Fifth, the province had low ability to provide supporting funds for projects with foreign loans, and prior work of such projects needs to be further strengthened. Talents specialized in work related to foreign loan projects were inadequate. Candidate project reseives were insufficient and much work remained to be done.

(3) Prospects for 2016

Qinghai has great opportunities for both foreign capital utilization and overseas investment. From the perspective of political environment and policy, BRI countries actively responded to the grant proposal made by China. In such a context, Qinghai will continue to make good use of its superior resources and take into consideration the market demand in the surrounding areas. It will mainly seek to build closer ties with Central Asia, West Asia, and Southeast Asia through enhanced policy coordination, facilities connectivity, unimpeded trade, financial

Regional investment analysis report 2015 233 integration and people-to-people bonds. The province will continue to promote the healthy development of inward and outward investment, accelerate the cultivation of new advantages in international cooperation and competition, promote eastward and westward opening-up, and form a multi-level and all-encompassing new pattern of opening-up so as to gain more development opportunities

 
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