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State to put financial muscle behind Chinese firms “going global”
December 25, 2014, 6:13 am

An employee works at a plant of Chinese multinational heavy machinery manufacturing company Sany in San Jose Dos Campos, Brazil, Feb. 6, 2014 [Xinhua]

An employee works at a plant of Chinese multinational heavy machinery manufacturing company Sany in San Jose Dos Campos, Brazil, Feb. 6, 2014 [Xinhua]

The Chinese government will increase financial support for Chinese companies investing and operating overseas, or “going global”, an official statement was quoted by China’s state news agency Xinhua.

This was announced after a Chinese Cabinet (State Council) executive meeting presided over by Chinese Premier Li Keqiang on Wednesday.

In line with Beijing’s new thrust on encouraging Chinese firms to shift investment and operations in foreign countries, the statement released after the government meet, said better financing can “make more use of excess production capacity and promote cooperation with foreign companies”.

“The move will raise the international competitiveness of Chinese products — especially equipment — boost structural upgrades of foreign trade and push manufacturing and financial sectors to a medium-high level,” the document said.

China has announced a $40 billion fund for investing in infrastructure, resources and industrial and financial cooperation to resurrect the old Silk Road trading route that once connected China and Europe.

Approval for overseas investment should be made easier to obtain, including the procedures for listing, mergers and acquisitions overseas and for banks setting up overseas branches, said the Cabinet statement on Wednesday.

Foreign direct investment by China’s non-financial companies rose 11.9 per cent to reach $89.8 billion in the first 11 months of this year, data from China’s Ministry of Commerce showed.

China will ensure financing support for exports of large equipment, encouraging commercial bank to finance for the whole industrial chain of equipment manufacture and promote use of foreign exchange reserves, added the official statement.

China has $4 trillion in government-administered foreign exchange reserves.

The Cabinet statement on Wednesday also stressed on improving policies concerning cross-border payments and clearing of the yuan and export credit insurance.

China is promoting the use of its currency as an alternative to the dollar in global trade and finance and more and more nations now want to capture the fast-growing market for offshore trade in yuan, also known as the renminbi.

The Chinese currency is already traded directly against the US dollar, the euro, the Japanese yen, the British pound, the Aussie and New Zealand dollars, Russia’s rouble, the Singapore dollar and Malaysia’s ringgit. Yuan settlement in trade surging from 2.06 trillion yuan in 2012 to 3.01 trillion yuan in 2013 worldwide.

 

TBP and Agencies

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