BEIJING - Chinese enterprises are gaining a stronger presence abroad off the back of motions to deepen international industrial capacity cooperation, while this effort is creating a new domestic economic growth engine.
State Grid Corp of China (SGCC), the world’s largest utility company, last week in Brazil witnessed a groundbreaking ceremony of an ultra-high voltage electricity transmission project at the Belo Monte Hydroelectric Dam, which was attended by Premier Li Keqiang and Brazilian President Dilma Rousseff.
This was SGCC’s first overseas transmission project. It will help provide safe and reliable energy and support social development in Brazil.
Global industrial cooperation is a priority for China against the backdrop of a slower domestic growth pace and unsteady global economic recovery. The creation of jobs and the identification of new growth engines are on top of many governments’ agendas, experts said.
Li, a proponent of industrial capacity cooperation, signed trade agreements worth $27 billion during his visit to Brazil.
The Belo Monte project is testimony of the nation’s “going global” drive. Advanced equipment produced by SGCC subsidiaries have found their way to more than 80 countries including the United States and Germany, with total export volume surging to 3 billion yuan ($490 million) last year, up 29 percent from 2013.
China is now the world’s largest manufacturing exporter, with total goods export volume reaching 14.4 trillion yuan last year. Mechanical and electrical equipment and high-tech products amount for 56 percent and 29 percent respectively.
There is also a pressing need for the going global of high-end industrial capacity to support growth, as the competitiveness of certain traditional industries is waning due to rising operational costs for exporters, said Zheng Yuesheng, spokesperson for the General Administration of Customs.
China is strengthening industrial capacity cooperation worldwide, moving production lines abroad, which creates jobs in other countries while boosting China’s exports, analysts said.
The government has issued a list of prioritized sectors in which it wishes to enhance such cooperation, including steel, non-ferrous metals, construction materials, railways, electric power, chemicals, textiles, automobiles, telecommunications and machinery.
“Proactive efforts to further open up have paved the way for manufacturers to go global,” Vice-Minister of the Ministry of Industry and Information Technology Liu Lihua wrote in a recent article.
Against the background of industrial upgrades, companies should aim to increase exports of products with high added-value, relabeling themselves as service exporters rather than just goods exporters and creating globally renowned brands, Liu said.
China should get used to its shifting role to capital exporter from capital importer, while Chinese firms should tap into foreign markets and hone their competitiveness, said Zhou Mi, a researcher with the Ministry of Commerce.
The country became a net capital exporter for the first time last year when outbound direct investment (ODI) outnumbered capital inflows. ODI grew 14.1 percent year-on-year in 2014, sharply eclipsing the 1.7 percent growth recorded for foreign direct investment.