Since the reform and opening up, attracting foreign investment has always been the focus for China. But now, investing abroad has become another focal point, and the latter has even surpassed the former. Now economic globalization is reaching a new stage. It requires Chinese enterprises to keep pace with global changes, and their investment abroad should be suitable to domestic and overseas situations.

For one thing, China is now striving to raise its position in global production and value chains.  In addition to opening up to developed countries, China should be open to more developing countries, while investment, as one major element in international cooperation, should accordingly go to both.

The “Belt and Road” strategy was proposed by Chinese President Xi Jinping at a new historical starting point, offering a new direction and platform for Chinese investment abroad. Chinese enterprises should take advantage of the national development strategy and opening-up policies when investing abroad.

Furthermore, Chinese enterprises should consider both economic returns and global development in investment. They should take a market-oriented path to gain more profits. At the same time, they should not consider profits to be the only goal, which was the path taken by Western countries.

The G20 Hangzhou Summit held in China 2016 vowed to implement the UN 2030 Agenda for Sustainable Development and made plans for different countries. One mission for the globalization of Chinese enterprises is to help developing countries realize industrialization, sustainable development and other goals specified in the agenda.

There are both challenges and opportunities for China’s foreign investment at this new turning point.

The United States and other developed countries are placing more and more restrictions on China’s investment, especially investments by Chinese state-owned enterprises. US President Donald Trump’s “America first” foreign policy plan will add obstacles to China’s investment in the country.

Also, deglobalization has become a trend in developed countries in recent years while populist sentiment is on the rise. They begin to impact the politics as well as domestic and foreign policies in these countries. Hence, investment strategies in developed countries should be adjusted.

Moreover, developing countries, especially Asian and African countries, have the greatest economic potential in the world, and they are also the ideal destination for investment. China’s foreign investment should have long-term vision rather than focusing on the pursuit of quick success and instant benefits. State-owned and private enterprises as well as financial institutions can cooperate to decide the investment direction and programs. Enterprises, in particular, should consider sustainable development in target investing countries.

Furthermore, risks are increasing for enterprises that are going global in terms of infrastructure construction, utilization of resources, economic and trade cooperation, and technological development. It is essential to do risk analysis and control.

To cope with these challenges, Chinese enterprises should strengthen risk evaluation and analysis capacity through establishing networks and mechanisms for research and exchanges on risks. They should also collect information and materials through various channels and build a comprehensive database for risks. Moreover, risk evaluation systems and prevention plans are necessary.

Lastly, they can draw on concepts and practice in global risk governance. To this end, they should cooperate with other countries and take the initiative to set up new rules for global risk governance. 

 

He Yafei is co-chair of the Center for China and Globalization.