Speech by Consul General Liu Yongfeng at the Seminar of Attracting Chinese Investment to Alberta
（From Chinese Consulate General in Calgary）
(Edmonton, March 3rd, 2012)
Honorable Deputy Premier Doug Horner,
I'm both delighted and honored to be a part of this seminar and to speak to you tonight. Chairman Mr. Kirk Quan has asked me to talk about China's foreign investment policy and the prospect of increased Chinese investment in Canada and Alberta. I'm very happy to share my ideas with all of you on this interesting topic.
First of all, let me brief you on the latest information about Chinese foreign investment.
As we all know, China has achieved significant economic development during the past 33 years of reform and opening up. At the same time, Chinese overseas investment has grown, developed and flourished during this period.
China is now the largest source of Foreign Direct Investment (FDI) among the developing nations. Chinese enterprises have gradually grown to become an active emerging force in the arena of multi-national investments.
Chinese foreign investment has been featured by rapid growth, in a wide range of areas, diversified types and upgraded levels of investment reaching historic heights in recent years.
The development of Chinese foreign investment has been accelerated.
In 2008, China's foreign investments first surpassed US$50 billion, and took as little as 3 years to grow from US$12.26 billion to exceed US$50 billion.
Particularly in 2009, influenced by the unprecedented severe international financial crisis, the global multi-national investments dived nearly 40% year by year; while China's non-financial foreign investments expanded 14.2 % over the previous year to US$47.8 billion.
In 2010, Chinese FDI reached US$ 68.8 billion, representing a 21.7% increase over the previous year. At the same year, China surpassed Japan and the UK to become the 5th largest multi-national investor. From 2001 to 2010, the average rate of China's FDI increase is 49.9%.
Although no official data is currently available, it is estimated by economic institutions that Chinese FDI approached US$80 billion in 2011.
Chinese foreign investments cover the majority of world economies and a wide range of areas.
By the end of 2010, Chinese enterprises have opened 160 million businesses outside China, and their investments are represented in 178 countries and regions, with 72.7% coverage of world economies.
China's FDI cover almost all areas of investment, 90% of which are focused in the areas of mining, energy, finance and manufacturing.
Diversified modes of foreign investment have been explored and implemented, from Greenland to Merge and Acquisition (M&A), Equity Participation, Funding and so on.
First, carry out the international energy cooperation through the investments in different forms, such as establishment of new companies, M&A and equity participation.
Second, set Research and Development (R&D) Centers, invest in hi-tech projects and acquire overseas assets in overseas regions with rich scientific and technological resources, so as to participate in the foreign hi-tech cooperation, and effectively support the independent innovation and industrial upgrade in China.
Third, gradually expand the vision of business landscape to the entire world, thereby contributing to expanding the development space, and promoting the structural adjustment, energy saving and emission reduction in China.
It is encouraging that a number of large enterprises "going out" have expanded the businesses through international operation, enhanced the technical and management level and built up international competitiveness.
PetroChina, CITIC (China International Trust and Investment Corporation) and COSCO (China Ocean Shipping Company) are among the 100 largest transnational corporations at the current time.
The eye-catching achievements China has made in foreign investment may cause some curiosity. What are the driving factors?
I would like to illustrate 4 aspects.
First, the state backs qualified enterprises to invest abroad, representing a clear policy orientation.
Back in August 1979, "going abroad to start business" was put forth by the Chinese government, and Chinese enterprises started their voyage and exploration around the world. From then on, the importance of overseas investment has been repeatedly highlighted by the government and top leaders of China.
Meanwhile, the rapid development of world market demand also provides a powerful drive for enterprises to make overseas investments.
Second, China adheres to the peaceful development, and carries out the international economic and technological cooperation based on comparative advantages and mutual benefits.
To date, China has signed the bilateral investment protection treaties with 129 countries in the world (127 treaties have come into force), and inked the free trade agreements with some countries.
Under these circumstances, a favorable macro-condition has been created for Chinese enterprises to invest abroad.
Third, Chinese enterprises and financial institutions have steadily enhanced their strengths and improved their independent development capacity.
Chinese enterprises rank No.1 in the world in terms of the ability to manufacture and install power generation equipment, as well as the ability to build railways and roads.
Fourth, staff of Chinese enterprises has the generally accepted ability to explore and persist in the face of challenges.
Nowadays, China is continuing its management mechanism reform in multinational investment and cooperation, and Chinese enterprises continue to be enthusiastic and confident in future foreign investment.
Obviously, Chinese foreign investments will continue to move forward with strong momentum.
It is clearly evident that China is in an important period of strategic opportunity to further develop its investment worldwide.
Following the requirements of our government, China has established the strategic development objective of "going out", that is, by the end of the 12th Five-Year Plan, the contribution of the "going-out" strategy to the national economy will obviously increase, the scale and level of foreign investment cooperation will leap forward, a number of large multinational corporations will emerge rapidly as a result, China will further cement its position as a global investment power, and further enhance its influence in international cooperation.
In my opinion, it is also an important period of strategic opportunity for Chinese enterprises to expand and upgrade their investments in Canada.
Generally, the all-round exchanges, including bilateral trade and investment between China and Canada have been strongly supported and encouraged, since the two nations established their diplomatic relations 42 years ago, and especially after the forging of the strategic partnership in 2005.
Only last month, Prime Minister Stephen Harper made a successful and fruitful visit to China. Foreign Investment Promotion and Protection Agreement has been reached, thus bringing favorable conditions to further develop bilateral cooperation and investment.
China is pursuing development through opening up, hoping the scale and level of foreign investment forge ahead. Canada, being rich in natural resources and energy and favorable in investment climate, will inevitably become one of the ideal destinations for "going out" Chinese investments.
Currently, Chinese investments in Canada total US$20 billion, with over one half of them here in Alberta. The 3 major Chinese oil companies, Petro China, Sinopec and CNOOC, have started their business in Alberta. The Bank of China also opened its branch in Calgary last year, aiming at providing effective financial service for companies seeking investments in Alberta.
Highly complementary in economy, fruitful in cooperation, predictably, more and more Chinese enterprises will invest in Alberta, especially in energy area in the near future.
Despite the bright future, the way for Chinese investments to get to Alberta is still very difficult. There are many problems and challenges faced by Chinese enterprises as they invest in Canada and Alberta.
First is lack of trust. There exists a certain degree of misunderstanding and, might I say even a hint of suspicion about Chinese companies' intentions of investing, particularly in the energy area, thinking Chinese companies, especially the state-owned companies, are aiming to control Canada's natural resources thereby threatening Canada's national safety.
But, in reality, all Chinese investment projects are subjected to the strict examination and have to be approved by the Canadian federal or provincial government before they can become a reality.
Many Chinese enterprises are multi-national corporations listed on various global exchanges. Investment decisions are made by the corporations themselves and are market-driven.
So far, oil and other resources and energy developed and extracted by Chinese companies are not currently shipped off to China.
Actually, Chinese companies invested in Alberta behave just as their Canadian counterparts - they sell their products to the local markets, at market price.
Second is the visa restriction. A lot of Chinese companies are facing a very basic problem, how to come to Canada. Getting a visa to come to Canada, even just to participate in trade exhibitions, is an arduous process and even impossible for some.
On at least one occasion, a quarter of the Chinese applicants to attend a trade show had their visa applications turned down.
It is very hard for Chinese companies that want to do business with or invest in a country which they have not visited and have been refused entry to.
I know there isn't an easy answer, but the process of obtaining visas to visit Canada for business needs to be reviewed, if Canada is earnest about attracting more Chinese investments.
Third is the need to build communication and good relations with local companies and government.
Some Chinese companies are keen on investing in Canada yet find it difficult to find effective way to consult and start businesses.
For those already operating in Canada, as rookies, they need to spend quite a long time to establish mature business connection, in order to survive the fierce market competition.
Fortunately, the Alberta Government and institutions like Edmonton Economic Development cooperation and China-Canada Business Association have been dedicated to supporting both Chinese and Canadian companies and played a bridging role in between. We highly appreciate that.
The Consulate General in Calgary is willing to work closely with all of you and people from all walks of life to further promote mutual understanding and trust, thereby laying a solid foundation for our friendly and mutually beneficial cooperation.
I'm happy to know all of you, as the elite in commercial circle, are interested in Chinese investment. I sincerely hope you will continue to play an active part in enhancing business exchanges and promoting bilateral cooperation.
I firmly believe that with the mutual efforts from our two sides, the scale, breadth and quality of Chinese investment in Canada will be upgraded and consequently enrich our bilateral economic cooperation.
Let's work together towards this goal.