By Lucy Hornby
BEIJING Nov 13 Chinese firms wanting to invest
overseas are likely to turn more to developing countries in the
face of rising protectionism in the West, the head of one of the
country's biggest banks funding overseas development said on
China, which often says its companies face barriers in
investing in the West, is currently awaiting a Canadian ruling
on state-owned CNOOC Ltd's $15.1 billion bid to buy
Nexen Inc.. Canada has delayed its decision twice.
"We can expect that in the near future, the trend of slow
growth and high unemployment in some economies won't change,
resulting in added layers of protectionism against Chinese
companies and rendering their "going out" more difficult," Li
Ruogu, president of the Export-Import Bank of China, said in a
written response to Reuters questions.
Ex-Im Bank is one of the main source of loans for Chinese
firms, particularly state-owned firms, investing abroad.
China's response will be to diversify markets and broaden
trade and investment ties with developing countries, he wrote.
That strategy would run counter to the trend of the few
years since the global financial crisis, when Chinese firms
shifted their focus from resource or infrastructure investments
in Africa, Australia, Asia and Latin America to buying corporate
stakes in mature markets, particularly Europe.
China is still more of an investment destination than a
source of funds, but that is changing. Ministry of Commerce
figures show China attracted almost twice as much foreign
investment as it made in 2011.
The Ministry's calculations show inbound foreign direct
investment (FDI) rose 9.7 percent last year. Outbound
non-financial FDI grew just 1.8 percent in 2011, but improved
considerably in 2012, rising nearly 29 percent on year in the
first nine months to total $52.5 billion.
Officials want that to average 17 percent in the five years
to the end of 2015, amassing $560 billion of investments in the
China's sovereign wealth fund will focus more of its $482
billion firepower on Asia both to beat a rise in protectionism
in the West and to boost exposure to rapid regional growth,
chairman and chief executive Lou Jiwei told Reuters in an
interview earlier this week.
Chinese protectionism is a growing complaint from foreign
companies seeking to buy stakes or gain market access in China.
Chinese officials responding to questions about
protectionism during this week's Communist Party congress have
not mentioned opening their own market further to foreign
investment. Li, in a written response to questions from the Wall
Street Journal, said China does not need to fully open its
capital account in order for the yuan to become a global
"Renminbi internationalization can be realized based on a
partial opening of the capital-account and partial
convertibility of the currency," Li told the Journal. He added
that, for now, China needs to focus on "managing short-term
cross-border fund flows."
Li told Reuters he expected more industrial consolidation in
China, particularly among state-owned firms, but added that the
market would determine the scale.