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Premier’s ‘business card’ is global capacity cooperation

Updated: Jul 27,2015 4:11 PM

Cooperation in international production capacity, following the proposal of the Belt and Road Initiative and the Asian Infrastructure Investment Bank, has become Premier Li Keqiang’s new “business card’’.

The Premier has consistently promoted this cooperation on overseas visits and on a recent trip to Europe he promoted China’s equipment manufacturing production capacity to enhance cooperation between the continent and China.

The Premier hosted a forum on China’s equipment manufacturing going out to overseas markets and the promotion of international production capacity cooperation on April 3. During the forum, he urged a new pattern of an open economy where not only China receives unilateral benefits but also accelerates other countries’ industrialization and employment expansion.

A month later the State Council issued the Guiding Opinions of the State Council on Promoting International Cooperation in Industrial Capacity and Equipment Manufacturing, the first high-profile State Council document that urges advancing international production cooperation.

The Opinions analyzed 12 key industries, namely iron and steel, nonferrous metals, building materials, railway, power, chemicals, textiles, automotive, communications, engineering machinery, aerospace, shipbuilding and marine engineering.

According to Zhengjun, general manager of China-Africa Lekki Investment Ltd., these 12 industries all have “urgent needs to upgrade and transform, as they possess domestic advantages and are in global demand.”

Gu Dawei, director of the Foreign Capital and Overseas Investment Division of the National Development and Reform Commission, told Caixin Media reporter that the Opinions represent clear policy intent and pragmatic policy measures, and “put forward eighteen policy measures with that are hugely pertinent and of high value, enforcing the Going Global policy of Chinese corporations.”

China has developed into the world’s largest exporting country and its foreign trade structure is shifting from trade and energy sources to fields like manufacturing, high technology and aerospace technology.

“Global cooperation in equipment and production plays a significant role in further improving China’s international reputation,” an official from the China Development Bank Business Development said. The key to a successful strategy for Chinese enterprises in going global is the ability to seek win-win situations with investor countries.

One of the highlights of the international production capacity cooperation is that the global infrastructure construction boom has brought new opportunities to China.

Long Guoqiang, the vice-director of the Development Research Center of the State Council, said that for developing economies, infrastructure is the basis of industrialization and urbanization, and the successful establishment of the Asian Infrastructure Investment Bank reflects the global focus on infrastructure.

There are also many challenges realizing production cooperation and the going global policy. The Caixin reporter observed that one of the main challenges faced by Chinese companies is the difficulty in obtaining financing. Many companies have relatively low corporate finance-raising capabilities, so it is difficult to obtain financial support from outside. China’s domestic banks have yet not formed a global network, and thus offer limited financial support.

Fan Bing, the Managing Director of South Africa’s Standard Bank (China), believes that Chinese companies’ general capability in opening to the international community has improved. However, the international competition has become more intense as well, Fan noted.

A senior expert at China Development Bank said capacity outgoing can face obstacles, and a support system is needed.