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 "It's only a matter of time," said Zhang Xiangchen, an assistant
minister at the Ministry of Commerce (MOFCOM), referring to when
China's outbound investment will eclipse inbound investment.
"If it doesn't happen this year, it will happen in the near future,"
he added.
Speaking on Wednesday at a news conference to publicize new
regulations meant to simplify overseas investments for Chinese
companies, Zhang said the value of overseas assets held by Chinese
firms still lagged behind foreign competitors, including in the
energy and natural resource sector.
The Chinese government's push to stoke overseas investment is part
of an effort to slow the rise of its foreign currency reserves at
home, while helping domestic companies buy assets, resources and
technology overseas.
Although Chinese outbound direct investment is expected to reach
$120 billion this year, Zhang said, Chinese firms' holdings equaled
only a tenth of the assets held by American firms and only half
those held by Japanese companies.
Under the revised rules, which were first published in September,
most domestic firms will no longer need to seek MOFCOM approval
prior to making an overseas investment, but must register the
investment with regional regulators.
MOFCOM approvals only are required for non-financial outbound
investments in "sensitive countries and regions" and "sensitive
sectors." The regulator also eliminated approval requirements for
the formation of offshore special purpose investment vehicles.
The new rules also greatly simplify approval and filing procedures
and reduce the time allowed to review overseas investments.
Of the total 6608 overseas investments approved by MOFCOM in 2013,
only 100 deals - mostly in "sensitive" sectors related to national
security - would require approval under the new regulations, Zhang
said, adding that companies have so far reacted "very positively" to
the changes.
The MOFCOM regulations follow similar rules issued by the National
Development and Reform Commission in April which stipulate that
regulatory approval only is required for investments in excess of $1
billion or if a project involves a sensitive country, region or
sector.
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China is moving to diversify its $4 trillion in foreign exchange
reserves, while reporting its slowest economic growth since the
global financial crisis. On Tuesday, China said its economy grew 7.3
percent in the third quarter, the slowest pace since the first
quarter of 2009.
Chinese firms, including Shanghai-based conglomerate Fosun
International Ltd <0656.HK> and Beijing-based Anbang Insurance
Group, made $74.96 billion in offshore acquisitions in the first
nine months of the year, a 21.6 percent rise from a year earlier.
Foreign direct investment amounted to $87.36 billion in the same
period.
Earlier this month, Anbang Insurance entered into an agreement with
Hilton Worldwide Holdings Inc to purchase its flagship Waldorf
Astoria New York hotel for $1.95 billion.
Zhang noted that Chinese energy and mining companies hold fewer
overseas assets compared to companies from developed countries. The
energy and mining sectors accounted for 16.7 percent of Chinese
companies' overseas holdings, a proportion Zhang considered low.
"Energy and natural resources is something we need," he said.
"Importing the energy and resources we lack to manufacture for the
world's consumer is very normal."
In 2013, China's non-financial direct investment overseas amounted
to $90.17 billion, a rise of 16.8 percent from a year earlier,
according to MOFCOM statistics. Total non-financial foreign direct
investment at year's end amounted to $525.7 billion.
(Editing by Eric Meijer)
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