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Outbound investment needs better protection

作者:admin 2020-09-14

Outbound investment needs better protection

An offshore wind farm in Nantong, East China's Jiangsu Province is seen under construction. The wind farm, with a total investment of 14.3 billion yuan ($2.09 billion), will be able to meet the annual electricity consumption of about 990,000 households. Photo: cnsphoto

Facing global protectionism, which is resulting in a tougher investment environment in many countries and regions, China should use multiple tools and mechanism, including those of the government, multilateral organizations and civilian power, to safeguard Chinese investors' overseas assets, according to a report released by a Chinese financial thinktank on Saturday.

The launch of the report, led by the former head of the China Securities Regulatory Commission Xiao Gang — who is also a research fellow of the China Finance 40 Forum (CF40) — comes at a time when Chinese investors are facing a tougher and more complex business environment in many overseas markets and urgently need help in the area.

Xiao made suggestions on ways to protect China's overseas investment and business operations, such as making full use of bilateral investment protection treaties, enhancing consular protection and utilizing international multilateral organizations, according to media reports.

The report also noted that the government, multilateral organizations and civilian power should all play roles in safeguarding the interests of Chinese businesses' overseas investment, but protective measures should be led by the government. 

A legal system that protects China's outbound investment should consist of the laws of the investors' home countries and their host countries, along with international conventions and regional multilateral rules, the report said. 

Chinese companies have been investing overseas in response to government calls and saturated domestic markets. However, obstacles have arisen in recent years as economies cool in many foreign markets and protectionism takes hold. 

In the first seven months of this year, China invested 451 billion yuan ($65 billion) in overseas markets, down 3.3 percent on a yearly basis, data from the Ministry of Commerce showed. 

According to Cong Yi, a professor at the Tianjin University of Finance and Economics, it is inevitable for Chinese companies to "go out" and investoverseas as China needs to break bottlenecks in domestic market and explore overseas resources. 

"The growth of China's outbound investment might slow in the next few years due to global political uncertainties and the sluggish global economy, but the trend of overseas investment will not be reversed, even with those obstacles," Cong said, adding that because of this situation, it is necessary for China to improve relevant legal frameworks to protect the interests of outbound investors. 

Many Chinese investors have been caught up in political uncertainties and become victims of foreign governments' discriminatory policies towardsChina in recent years. In particular, Chinese companies, such as Huawei,TikTokand Tencent'sWeChat, are being attacked by the US government as it lashes out against China's technological rise. 

According to Cong, the government can stipulate conditions in bilateral trade agreements such as commercial arbitration, corporate appeal mechanisms and overseas investors' treatment standards. 

Chinese business organizations should also play a bigger role in easing friction between Chinese investors and overseas governments, such as by negotiating with corresponding industry bodies or even submitting complaints and suggestions to overseas governments. 

Lin Jiang, a professor of economics at Lingnan University College of Sun Yat-sen University, said that Chinese companies should thoroughly study the targeted country they plan to invest in, such as how it has treated Chinese investors in the past, and the specific country's laws for overseas investors, instead of making rash investments. 

He also told the Global Times that Chinese industry organizations should support such due diligence by providing companies with information such as copies of legal documents. They can also help companies find lawyers or translators to help with lawsuits.

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