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Xinjiang Production and Construction Corps (XPCC)

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

In accordance with the requirements of the NDRC’s Administrative Measures for the Approval and Registration of Overseas Investment Projects (NDRC Decree No. 9), and considering the actual situation of overseas investment by XPCC enterprises in recent years, XPCC formulated the Administrative Measures for the Approval and Registration of Overseas Investment Projects of Xinjiang Production and Construction Corps (XBF [2015] No. 6).

According to the NDRC’s Catalogue of Investment Projects Approved by the Government, Administrative Measures for the Approval and Registration of Overseas Investment Projects, Decisions of the National Development and Reform Commission on Revising the Relevant Articles of the Administrative Measures for the Approval and Registration of Overseas Investment Projects, and the Circular of the State Commission Office for Public Sector Reform and the National Development and Reform Commission on the Prohibition of Setting Items for Independent Decision-making for Enterprises as Prerequisites for the Approval of Investment Projects, and in light of the actual situation of foreign investment in XPCC in recent years, XPCC formulated the Administrative Measures for the Approval and Registration of Foreign Investment Projects of the Xinjiang Production and Construction Corps (XBF [2015] No. 25).

In accordance with the guiding principles of the Guiding Opinions of the State Council on Promoting International Cooperation in Production Capacity and Equipment Manufacturing (GF [2015] No. 30) and based on the practical needs of XPCC in promoting international production capacity and equipment manufacturing cooperation, XPCC formulated the corresponding implementation opinions.

  • (2) Inward and outward investment of XPCC in 2015
  • 1) GROWTH OF INWARD AND OUTWARD INVESTMENT

Under the guidance of the national policy of “actively, reasonably and effectively’’ using foreign capital, XPCC made certain achievements in this regard. In 2015, there were five new foreign-invested enterprises approved with a total investment of US$346 million, 72% of which was foreign investment. The actual utilization of foreign capital amounted to USS268 million, a 17.1% increase over 2014. In 2015, up to 16 new overseas investment projects, one capital increment project, and 10 new overseas Chinese institutions were registered, and theoverseas investment of XPCC reached US$71.6 million. According to the Administrative Measures for the Approval and Registration of Overseas Investment Projects of Xinjiang Production and Construction Corps (XBF [2015] No. 6), and with the national registration system for overseas investment projects put in place, XPCC Development and Reform Commission confirmed the equity acquisition project of Xinjiang Ruyi Textile and Garment Co., Ltd. and accepted two overseas investment projects of Beixin Road & Bridge Group Co. Ltd. The total investment of these projects was US$78.5215 million. As such, XPCC made rapid progress in overseas investment.

2) STRUCTURE OF INWARD AND OUTWARD INVESTMENT

Foreign investment was mainly utilized in food processing (100% foreign investment), new energy (100% foreign investment) and machinery manufacturing (100% foreign investment) industries, with the investment coming mainly from the Hong Kong SAR, the Cayman Islands, and the British Virgin Islands. In 2015, overseas investment of XPCC went to areas like agriculture, forestry, animal husbandly and fishery, construction, manufacturing, wholesale and retail sales, transportation and warehousing, and business services. The investment was mainly distributed in nine countries and regions including Tajikistan, Kyrgyzstan, Uzbekistan, Cuba, and the Hong Kong SAR.

3) PROBLEMS

Although XPCC made progress in utilizing foreign capital and making overseas investment, compared with other provinces, municipalities and autonomous regions of China, it still lags behind in terms of the quantity, scale, quality and efficiency of relevant activities. First, there is a lack of knowledge on the international financial market and the ability of risk management. The repayment period of foreign loans is long and the interest rate is relatively low, but China does not have a system that can provide sufficient help for enterprises to better prevent risks related to foreign debts. Also, there is a lack of talents familiar with international capital operation, leading to exchange rate losses in some projects. The adjustment of the RMB exchange rate, the reform of the exchange rate determination system, and the reform of domestic and foreign trade systems, as well as the reform of the fiscal and taxation system and the price system have also caused policy-related losses for some projects supported by foreign loans. Second, the investment environment needs to be improved and the utilization of foreign capital grows only at a slow pace. The situation at home and abroad has led to an economic slowdown both at home and abroad, and resulted in decreased profitability and weak willingness to invest overseas on the part of enterprises. Infrastructure in various industrial parks are backward. At present, there are 29 industrial parks at or above the XPCC level, and many of them have only completed the preparation work for construction. Foreign capital and enterprises are therefore enabled to come and settle. Third,

talent cultivation needs to be strengthened. There are inadequate high-quality professionals in XPCC for foreign investment attraction and many of the foreign investment contracts that have been signed cannot be actually performed. Fourth, the overseas investment of XPCC enterprises is still in its infancy, characterized by small number, small scale and low efficiency, and relevant enterprises are also inexperienced in international operation. Moreover, capital shortage, financing difficulties and high export credit premium for XPCC enterprises have also hampered the implementation of resources development projects and comprehensive agricultural development projects in neighboring countries in Central Asia.

4) DEVELOPMENT TRENDS AND PROSPECTS FOR 2016

XPCC will folly implement the guiding principles of the 18th National Congress of the CPC, the second, third, fourth and fifth plenary sessions of the 18th CPC Central Committee and the Second Xinjiang Work Seminar of the State Council, and firmly grasp the strategic opportunities provided by the BRI, and drive development by further opening-up. XPCC will comprehensively improve its economic openness, implement a more proactive approach to opening-up, speed up the transformation of the development model, innovate in the pattern of opening-up, and adhere to the principle of gradual and steady development to improve the comprehensive advantages and overall benefits of foreign capital utilization. XPCC will accelerate the pace of its going-global efforts, and improve the ability to guard against international economic risks. It will keep up innovative thinking, strive to improve the investment environment, vigorously introduce advanced equipment, technology, concepts and management experience from the outside, and actively support foreign investment projects conducive to economic restructuring, industrial upgrading and job creation. XPCC will make more efforts to implement the strategy of opening toward the west, give foil play to its organizational advantages, and support its enterprises to go global and make reasonable and effective use of foreign resources and markets. XPCC will strengthen the management of foreign investment projects and effectively improve the quality and benefits of foreign capital utilization. In 2016, XPCC expects to obtain US$274 million of foreign direct investment, USS55.92 million of foreign loans and make US$78.76 million of overseas investment. In order to do a good job in the utilization of foreign capital and in overseas investment, XPCC will work mainly in the following aspects.

First, it will relax the access control for foreign investment, simplify management procedures, improve work efficiency and increase transparency. It will encourage foreign investors to invest in manufacturing, high-tech industries, modern sendees, new energy and energy conservation, as well as environmental protection; steadily expand the opening-up in the fields of finance, logistics, education, medical care and culture; guide foreign investors to participate in efforts to promote ecological progress and innovation-driven development;

support foreign-funded enterprises to enhance their innovation capabilities and deeply integrate into the development of XPCC; and guide foreign capital to flow into XPCC’s development priorities.

Second, it will pay close attention to the domestic and foreign environmental conditions and trends in loan-granting from international financial organizations and foreign governments, make efforts to obtain foreign government loans and actively expand the size of loans from key countries such as the United States, Germany, Israel and France. It will pursue breakthroughs first in key fields such as energy conservation and emission reduction, industrial upgrading and social development, and in key areas such as cities, economic and technological development zones, and industrial parks, so as to promote the utilization of foreign capital in an all-round way.

Third, it will rely on domestic and foreign markets and resources, give full play to the decisive role of the market, accelerate the improvement of resource allocation inside and outside Xinjiang, actively expand the development space, rely on the advantages of mineral resources in neighboring countries to support XPCC enterprises to participate in the development and utilization of mineral resources. It will let enterprises be main bodies in the going-global campaign through various forms such as export, foreign aid, labor export, overseas investment, as well as economic and technological cooperation. XCPP will seek a breakthrough in its going-global efforts by focusing on agriculture in an effort to participate in the construction of the Silk Road Economic Belt, and push forward outward development of agriculture in XPCC comprehensively.

  • (3) Investment in and from BRI countries in 2015
  • 1) INVESTMENT BY BRI COUNTRIES IN XPCC

In 2015, the Hong Kong SAR invested USS223 million in XPCC, accounting for 83.2% of the total utilization of foreign investment. The investment all came from wholly foreign-owned enterprises, involving industries such as food processing, new energy and machinery manufacturing.

2) INVESTMENT OF XPCC IN BRI COUNTRIES

In 2015, XPCC enterprises invested USS30.1078 million in BRI countries, the industries involved were, among others, construction, agriculture, forestry, animal husbandry and fishery, and manufacturing. The key participating enterprises were Xinjiang Beixin Road & Bridge Group, Xinjiang Production and Construction Corps Construction Engineering (Group) Limited Liability Company, Xinjiang Hengrui International Trade Co., Ltd., and Xinjiang Production and Construction Corps Design Institute. The investment went mainly to eight countries and regions including Tajikistan, Kyrgyzstan, Uzbekistan, and the Hong Kong SAR.

 
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