Chinese companies to boost overseas investment
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Sun Lujun, director of the capital management department of the State Administration of Foreign Exchange, said on Wednesday that the new policy will facilitate overseas investment and better support companies seeking markets overseas.
Sun also said China will continue to loosen restrictions on capital control and facilitate overseas investment by the end of 2015.
In addition to traditional investment models, such as building plants or upgrading existing facilities, a growing number of companies are looking at mergers and acquisitions.
Chinese investment overseas through mergers and acquisitions in 2010 was worth $23.8 billion, accounting for 40 percent of total investment.
Last year saw a new wave of companies targeting overseas acquisitions, including the high-profile private automaker Zhejiang Geely Holding Group buying Volvo Cars and Sinopec Group acquiring a stake in Repsol's Brazilian subsidiary.
Companies investing overseas traditionally favored the machinery and textile sectors, but recently investments in agriculture, mining and energy have surged, the survey said.
Other sectors are also attracting interest, an analyst said.
"High-tech and clean energy technology companies are becoming hot targets for overseas mergers and acquisitions," said Xu Weiqing, an analyst with Zero2IPO Group, a capital market research company.
In 2010, Chinese firms invested in 3,125 overseas companies in 129 countries and regions and total foreign direct investment in non-financial sectors rose 36 percent to $59 billion, according to the Ministry of Commerce.
China has become the world's second-largest acquirer of foreign companies, only next to the United States, according to a recent research by the Chinese Academy of Social Sciences.
But a lack of diversified fundraising channels also restricts investment overseas, the survey showed.
"Fundraising difficulties and lack of international operation experience are major limitations for Chinese companies hoping to expand overseas, especially for small- and medium-sized enterprises," said survey project director Jia.
Using the companies' own capital and borrowing from banks are the two main channels for overseas investment. Other financing channels such as stocks, securities and other market instruments are not widely used, Jia said.
