China is likely to invest over USD one trillion overseas and import USD 10 trillion commodities over the next five years, Premier Li Keqiang has said as the world’s second largest economy looks to invest its record USD 3.50 trillion forex reserves abroad to utilise it to spur growth.
Although China’s economic growth has slowed, growth volume is increasing annually, Li spoke at an economic and trade forum of China and Central and Eastern European countries in Suzhou, Jiangsu province yesterday.
He said that as long as China’s annual economic growth remains above 6.5 per cent in the next few years, it can get close to the target of becoming a high-income country by 2020, official media here quoted him as saying.
This will provide more opportunities for the world, including Central and Eastern European countries, he said.
China is ramping up its strategy to halt the slowdown of its economy which is hovering around seven per cent.
In the last quarter it dipped below seven per cent to 6.9 per cent for the first time since 2009.
Analysts say that Li’s assertion about one trillion dollars overseas investment is a strong hint to make use of the huge foreign exchange reserves to get better returns.
China’s outbound investment (ODI) rose to USD 95.21 billion in the first ten months of this year registering an increase of 16.3 per cent as more Chinese firms invested abroad.
The ODI so far this year has covered 5,553 overseas-based companies in 152 countries and regions, the Ministry of Commerce (MOC) said on November 16.
Song Yunzhong, deputy director of the Energy and Technology Research Institute at China National Offshore Oil Corp, said it is a good opportunity to enter the European market as China has the technology and financial advantages while Europe needs Chinese investment.
“Investment is usually the forerunner when exporting equipment and technology and this is mutually beneficial,” he said.
“We have huge foreign exchange reserves. Why not use them to support Chinese firms to ‘go global’ and improve exports of China’s equipment and technology,” Song told state-run China Daily. The volume of trade between China and these European nations set several records last year, Li said, adding that Chinese trade with the countries exceeded USD 60 billion.
He suggested that China and Central and Eastern European countries strengthen cooperation on connectivity projects, on which China holds technological and cost advantages.
At the leaders’ meeting, both sides will also advance the China-Europe land-sea express route, Li said.
He said China can help Central and Eastern European countries with funding problems to upgrade infrastructure in transportation, electricity, industrial equipment and in and other fields.
“As long as they use Chinese equipment and products, China will provide more flexible funding conditions,” Li said.
Yu Nanping, a professor of international relations at the School of Advanced International and Area Studies under East China Normal University, said Central and East European countries urgently need to upgrade outdated infrastructure to improve production efficiency.
This is because they are experiencing a “profound economic adjustment” after the European debt crisis.
Yu also said China’s Belt and Road Initiative requires Central and East European countries to become a “logistics centre” and “economic corridor” to extend the strategy in Europe.