SCIO briefing on the 'new normal' in the Chinese economy and deepening supply-side structural reform

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Xu Shaoshi, minister of the National Development and Reform Commission (NDRC)

Hu Kaihong, director-general of the Press Bureau, State Council Information Office

Jan. 10, 2017

Phoenix TV:

It was reported recently that the amount of cross-border mergers and acquisitions by Chinese enterprises has reached over US$200 billion. And, it is said that the Chinese government gives extra-national treatment and subsidy to foreign enterprises in China, which influences fair competition. What comment do you have on these two issues? Thanks.

Xu Shaoshi:

The issues involve "bringing in" and "going out," as well as how to establish a unified, open, competitive and orderly market system. With the growth of Chinese economy, it is normal for some Chinese enterprises to go in search of overseas mergers and acquisitions and a global presence. From January to November in 2016, non-financial overseas investment reached US$161.7 billion, 55.3 percent growth year-on-year. It is estimated that the total amount will hit US$170 billion when the final figures for 2016 are calculated. The Chinese government encourages domestic enterprises, especially those considered capable and qualified to invest in overseas markets, and participate in the construction of the Belt and Road Initiative and international industrial capacity cooperation. It will not only help the transformation and upgrading of the Chinese economy, but also facilitate cooperation with the rest of the world. Therefore, the Chinese government has always been supportive in this regard. As for the question of whether the amount of overseas mergers and acquisitions is US$200 billion or not, I think everyone can judge when we consider the whole of non-financial investment is about US$170 billion including some green field investment.

We are also aware of the second issue you mentioned. There are some irrational trends in overseas investment. We think it may bring risks. It will be bad for both the investor country and investment destination should these risks develop. Therefore, we are analyzing this issue and we will strengthen guidance. We will check the authenticity and compliance of some huge non-core business investments and non-standard investments, with the aim of guiding the enterprises to decide carefully, invest accurately and rationally. I think this is necessary. However, our policy of encouraging overseas investment does not change and will not change.

The second question concerns the unified, open market system featuring fair competition. As one of the countries attracting the most foreign investment, China has been committed to creating a unified, open market system of fair competition. We extend the same treatment to all enterprises, including foreign-funded, privately-run and State-owned ones. We never give any specific "super-national treatment" to any country or any type of enterprise. Of course, we give some supportive policies to some industries and some enterprises, and I think this approach is normal and in line with international practice.

However, I would like to stress one point. Not long ago, an executive meeting of the State Council adopted a document involving 20 measures on expanding the country's opening-up and actively making use of foreign investment. The document will be circulated soon. It follows that we will further open up the market, further introduce foreign capital, and work harder to create a pleasant system and market environment of unified openness, fair competition and orderly operation. Thank you.

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