1970-01-01 08:33:27
With acquisition evolving into a global trend, China should facilitate both inbound and outbound investment, according to a senior official of the Ministry of Commerce.
"Foreign acquisition of domestic enterprises is not a bad thing and will bring benefits to the Chinese economy," vice minister of commerce Liao Xiaoqi said at the East Asia Investment Forum over the weekend.
The contractual value of foreign acquisitions in China was around five billion U.S. dollars in 2006, only 2.5 percent of foreign investment in the country. The percentage in the manufacturing industry was below one percent, he said.
By contrast, transnational acquisitions worldwide exceeded 710 billion U.S. dollars in 2005, which soared 88 percent over that in 2004. Nearly 80 percent of outbound investment by multinationals was made through acquisitions.
However, most foreign investors stick to the traditional investment of factory building, which was introduced in China after the country opened itself up and adopted economic reforms since late 1970s.
Foreign acquisitions of domestic companies can bring in more capital and advanced technology for the rejuvenation of many state-owned enterprises, the official said.
Liao said that China's economic reforms and opening-up have entered a new phase which requires both foreign investment in China and encourages domestic companies to invest abroad.
China's outbound investment grew by an annual average of 71.3 percent between 2004 and 2006. By the end of 2006, China's outbound investment (excluding the financial sector) added up to 73.3 billion U.S. dollars. Related industries had expanded from shipping and catering to manufacturing and processing, agriculture, resources exploitation, engineering, and research and development.
Acquisitions took up 36.7 percent, or 4.74 billion U.S. dollars, in total outbound investment made by Chinese companies last year.
Liao said that China needs to strengthen the supervision of acquisitions as other countries do. "The move is to facilitate the healthy development of acquisitions," he said.
Source: Xinhua