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In accordance with the BRI, Heilongjiang Province issued the “China-Mongolia-Russia Economic Corridor” Heilongjiang Land and Maritime Silk Road Economic Belt Development Plan as the guiding document of Heilongjiang’s development and opening-up, defining the direction and path of the province’s opening-up to the outside world. In order to implement the plan, the province launched the Implementation Plan for the Participation of Heilongjiang Province in the Construction of the Silk Road Economic Belt and the 21st Century Maritime Silk Road and the Key Points for the Development of the Heilongjiang Land and Maritime Silk Road Economic Belt in 2016.
2) INTRODUCE POLICIES TO PROMOTE OPENING-UP
In order to promote the development the of Suifenhe-Dongning Pilot Development and Opening up Zone, the People’s Government of Heilongjiang Province issued the Implementation Opinions of the People’s Government of Heilongjiang Province on the Implementation of Several Policies and Measures Supporting the Development and Opening up of Major Border Areas. There is also the Circular of the General Office of the People’s Government of Heilongjiang Province on Issuing the Implementation Plan of Heilongjiang Province to Promote International Production Capacity and Equipment Manufacturing Cooperation, which aims to guide the healthy and orderly development of international production capacity and equipment manufacturing cooperation of the province. The Circular of the General Office of the People’s Government of Heilongjiang Province on Promoting Replicable Pilot Reform Experience of China (Shanghai) Pilot Free
Trade Zone intends to help promote international investment facilitation, establish an efficient and convenient management system and supervision model, and encourage innovations in the opening-up and development mechanisms for border areas. The Implementation Opinions of the General Office of the People’s Government of Heilongjiang Province on Promoting the Transformation, Upgrading, and Innovation-Driven Development of All Development Zones in Heilongjiang Province aims to renew the approach to the utilization of foreign capital, change the way of attracting investment, and give full play to the role of development zones as leaders in attracting foreign investment.
3) FURTHER STREAMLINE ADMINISTRATION AND DELEGATE POWER
TO IMPROVE THE LEVEL OF FOREIGN PROJECT MANAGEMENT
After the 18th National Congress of the CPC. Heilongjiang Province revised the Catalogue of Investment Projects Approved by the Government for two times to delegate more power regarding foreign investment project management to lower-level authorities. All foreign investment projects were to be approved by the relevant authorities at the local level rather than the provincial level except for those in restricted categories for which such delegation of power was explicitly prohibited in relevant national regulations and those submitted by enterprises directly affiliated to a provincial authority. This further simplified the procedures for filing foreign investment projects. In addition, the province applied the same requirements and filing procedures for domestic and foreign investment projects, based on the Circular of the General Office of the People’s Government of Heilongjiang Province on Further Simplifying the Filing Procedures for Investment Projects of Enterprises. Project filing was thus made even easier and efficient. The province strictly followed the requirements of the Circular of the National Development and Reform Commission on the Implementation of the Administrative Measures for Approval and Registration of Overseas Investment Projects to launch online filing of overseas investment projects and improve work efficiency.
Regional investment analysis report 2015 263 foreign capital, down 12.94% year-on-year; the secondary industry actual used US$3,611 billion, a 27.89% increase over the previous year; and the actual utilization of foreign capital by the tertiary industry was US$1,741 billion, a 19.14% decrease. The actual utilization of foreign capital in the 10 major industries of Heilongjiang amounted to US$4,806 billion, a 4.32% year-on-year increase.
ii) Foreign loans. The Asian Development Bank (ADB) added US$60 million of loans for the transformation and development of coal-exhausted cities in Heilongjiang Province, making a total of US$310 million, the largest loan so far in Heilongjiang from international financial organizations. The project also received a grant of US$1.1 million from the ADB for technical assistance, and preparations of the implementation are under way. Preliminary work commenced for the eco-friendly irrigation and drainage system of a modern agriculture project supported by a loan of US$150 million from the ADB. In addition, the following projects were also launched smoothly: ADB-funded US$150 million central heating project, the smart transportation project in northern high and cold cities with US$200 million of loans from the World Bank, and the energy-efficient reconstruction project in Harbin with EUR50 million of loans from the European Investment Bank. Applications were approved by the state for the following two projects: the vocational education project in Harbin of EUR24 million of promotional loans from Germany, and the Qitaihe Technician College’s new campus construction and equipment purchase project funded by promotional loans from Germany.
Regarding the nature of the investment entities, 80 out of 92 investors, or 86.96%, are private enterprises, and their actual investment was USS267 million, accounting for 91.44% of the total. The remaining 12 are state-owned enterprises, 13.04% of the total, with an actual investment of USS25 million, accounting for 8.56%. Major projects delivered by private enterprises include the following: Menglan Xinghe Energy Co., Ltd. invested USS42.47 million in Russia, Xuanyuan Group invested US$27.95 million in Belarus, Heilongjiang Zijin Longxing Mining Co., Ltd. invested US$1.54 million in Russia.
ii) Overseas project contracting. In 2015, the total value of new contracts signed for overseas projects by Heilongjiang enterprises was US$2,346 billion, an increase of 3.18 times over the previous year, ranking fifteenth in China; the turnover was US$2,516 billion, a 1.8 times year-on-year increase, ranking fourteenth in the country. By the end of 2015, the contract value of overseas projects amounted to US$10.08 billion and the turnover totaled USS9.19 billion. The new overseas contracts signed for projects in Russia had a total value of USS 16 million, accounting for 0.68% of the province’s total, a 0.06% year-on-year increase. The total turnover was US$235 million, accounting for 9.34% of the province's total, a year-on-year increase of 48.5%. The value of new contracts signed by Heilongjiang enterprises for projects in other countries and regions amounted to US$2.33 billion, accounting for 99.2% of the province’s total, up by 3.16 times from the previous year, with a total turnover of USS2.281 billion, accounting for 90.66% of the total of the province, up 2.08 times. Most of these projects are in Asia, with a total value of US$2.19 billion, or 93.4% of the total; and the turnover reached USS 1.83 billion, accounting for 72.7% of the total.
ii) Few sources of foreign investment involving few transnational corporations. Foreign investment mainly came from the Hong Kong, the British Virgin Islands and the Cayman Islands. The investment entities were mainly companies registered abroad by domestic owners for special purposes. Few enterprises were foreign high-tech companies or among the Fortune Global 500. This lead to a failure in truly bringing in capital, intelligence and advanced technologies.
Hi) Overconcentration of outward investment and weak competitiveness of outward investors. Heilongjiang’s overseas investment was made by private
Regional investment analysis report 2015 265 companies, mostly small ones. They were short of capital, had a weak ability to develop and compete in the international market, and were in great need of professionals in the areas of law, taxation, finance and accounting, as well as technicians. Some of the investors pursued quick profits without long-term plans. Some can even be reckless in making the investment in the first place, give little thought to corporate social responsibilities, and fail to integrate into the local society. Thus, they may breach local policies and laws from time to time. Moreover, Heilongjiang enterprises mainly invested in the Russian Far East in low-end businesses such as light industrial product processing, logging, wood processing, crop cultivation, food processing, etc., delivering products of low added value.
4) DEVELOPMENT TRENDS AND PROSPECTS FOR 2016
At present, the inward and outward investment of Heilongjiang Province sees both challenges and opportunities. Internationally, a new round of global technological and industrial revolution gave rise to the new normal of industrial structure, and developed countries seized commanding heights and reestablished their leading edges in high-end manufacturing. Emerging economies actively promoted industrialization, vigorously introduced advanced technologies and equipment, in a bid to move up along the global value chain. There is a new trend in transnational investment and industrial transfer, and new international investment and trade patterns are taking shape. At home, the economy entered the new normal featured by mid- to high-level growth, and the reform on the supply side has been continuously advanced. The effort to cut excess production capacity has been intensified, and a new round of industrial structural adjustment has been rolled out on all fronts. There is no doubt that depending on the cost of factors to attract foreign capital, like what we have been doing earlier, will not continue to work in the new era. The BRI, a grand proposal made by China, has created historical opportunities for inward and outward investment today. Enterprises are now strongly encouraged to go global and carry out international production capacity and equipment manufacturing cooperation. The implementation of the “China-Mongolia-Russia Economic Corridor” Heilongjiang Land and Maritime Silk Road Economic Belt Development Plan and the improved infrastructure and supporting services will help the international logistics industry represented by cross-border transport over the Eurasian Continental Bridge and cross-border e-commerce represented by e-commerce trade with Russia flourish in Heilongjiang. Important opportunities for inward and outward investment and cooperation in related fields have been created for Heilongjiang, which enjoys the advantages of a latecomer. These advantages include: The province is the largest grain producer in China, enjoys great ecological conditions, has great potential for resource development and deep processing; has accumulated rich experience in cooperation with Russia; and boasts vast room for the transformation of high-tech research achievements and market-oriented reform.
In accordance with the development orientation assigned by the state, Heilongjiang Province will focus on advancing policy coordination, facilitiesconnectivity, unimpeded trade, financial integration and people-to-people bonds and take Harbin as the center to form the Heilongjiang Corridor connecting Asia and Europe, which contains the Dalian-Harbin-Jiamusi-Tongjiang railway, Suifenhe-Manzhouli railway, Harbin-Heihe railway, and the border railway, which are to be connected with Russia’s railway lines in Siberia. The province will attract production factories to gather along the corridor, develop domestic and overseas industrial parks oriented to Russia, create cross-border industry chains, build up a strong export-oriented industrial system, strive to form a new growth pole of the regional economy, and create an important platform for expanding China’s cooperation with Russia, Europe and Northeast Asia. Heilongjiang will build itself into an important window for China to open to the north, providing important support and making important contributions to the implementation of the BRI. To this end, Heilongjiang Province will put its focus along the corridor, further increase investment in commerce, tourism, finance and logistics, import resource-intensive processing facilities, and export processed products and high-tech research achievements to promote the improvement and upgrading of the structure of its utilization of foreign capital. At the same time, the province will step up cooperation in overseas infrastructure construction and energy and resource development projects, actively promote international capacity and equipment manufacturing cooperation, encourage processing and manufacturing enterprises to go global despite international trade barriers, and enhance the capacity for sustainable development.
In 2015, four BRI countries, i.e., Russia, Singapore, Pakistan and Syria, invested in 22 projects in Heilongjiang Province, mainly in manufacturing, wholesale, retail sales, and catering.
2) INVESTMENT IN BRI COUNTRIES BY HEILONGJIANG ENTERPRISES
In 2015, 96 enterprises in Heilongjiang Province set up, in 12 BRI countries, 110 overseas enterprises. The contractual outward investment was USS6.24 billion, up 5.74 times over the previous year, accounting for 90.42% of the total of the province. Up to 52 Heilongjiang enterprises made actual investment of US$196 million in BRI countries, down 21.29% year-on-year, accounting for 67.1% of the total overseas investment of the province. In addition to the large investment in Russia, investment in other BRI countries also showed rapid growth, while investment in non-BRI countries and regions, such as the United States and the Hong Kong SAR, fell sharply by 46.54% and 87.75% respectively. The province signed new contracts worth US$2,206 billion for projects in nine BRI countries, i.e., Pakistan, Mongolia, Iraq, Turkey, Indonesia, Kazakhstan, Turkmenistan, the Philippines and Russia, accounting for 94.0% of the total contractual overseas
Regional investment analysis report 2015 267 investment of the province. A total turnover of USS2.064 billion was achieved in 13 BRI countries, namely Turkey, Iraq, Russia, Indonesia, Mongolia, Pakistan, Saudi Arabia, Uzbekistan, Turkmenistan, Kazakhstan, Bangladesh, India and the Philippines, representing 82.0% of the total.
3) DEVELOPMENT TRENDS AND PROSPECTS FOR 2016
Heilongjiang will pay more attention to the quality of foreign capital attraction and combine capital introduction with the introduction of technologies and intelligence. It will strengthen cooperation with major international enterprises with advanced technologies, efficient management and market development, and encourage and support the establishment of joint venture R&D, marketing, procurement and financial centers in Heilongjiang. The province will strive to maintain the scale of investment from BRI countries and regions such as the Hong Kong SAR and Singapore, and attract investment in agriculture, aviation and information technology from countries with advanced technologies such as Israel, Russia and Ukraine. In the light of the actual situation of the province, relevant authorities of the province will work to revise the Heilongjiang section of the Catalogue of Priority Industries for Foreign Investment in Central and Western China, and get more advantageous industries into the encouraged categories. The province will also guide and encourage local enterprises to go to Russia for cooperation in agriculture, food processing, light industrial production, logging, wood processing and mineral resources development, and vigorously advance the construction of overseas industrial parks in Russia, so as to grasp the opportunities brought by the development campaign of the Russian Far East. It will continue to promote international project contracting and labor export to Russia, strive for the export of technologies, capital and brands, and strengthen the position of Heilongjiang investors in Russia. It will continue to tap into the potential of Harbin Power Plant Equipment Corporation to carry out international project contracting in Southeast Asia and South Asia, and speed up the construction of contracted projects already commenced. The province will also support local enterprises to develop agricultural and mineral resources in Central Asia.