It was a case of chin up, chest out at the recently concluded CIFIT in Xiamen, with the doors swung wide open to foreign sophisticated industries and its private industries poised to venture out.
China’s economic growth may be slowing down after three decades of high growth, but the 19th China International Fair for Investment and Trade (CIFIT) held at Xiamen from Sept 8 to 11 showcased a “new China” that is confidently restructuring its economy in response to global challenges.
CIFIT 2016 themed “New Concept, New Development: Towards a new world of open economy” clearly signified China’s readiness to embrace reforms, after it has sailed through the exciting period of opening up in the 1980s-1990s, and the 2008 crisis that hit its industries badly.
A new China will discard China-made cheap and low-quality industrial products, and counterfeits – rampant at the beginning of the opening-up and even to this day, but will want to see quality enterprises that can compete internationally with high-end goods and services, such as those provided by Huawei, Lenovo and Haier.
The financial crisis of 2008 and China’s disappearing demographic advantage, as well as external trade friction, have forced industries and the economy to go for structural changes. Slower economic growth backed by quality investments is to be the new norm.
In fact, emerging industries that focus on quality and technology have gradually replaced traditional industries and become a driving force in economic development. Mobile phones, computers, household electrical appliances, machinery and equipment, property development and rail technology, among others, have gone global.
And the ‘One Belt, One Road’ economic initiative expounded by President Xi Jinping three years ago is offering unprecedented opportunities to companies within the mainland to go global and have a say in the world.
While structural changes are taking place at local enterprises, China is opening up further to usher in more high-tech and high-value foreign brands to stimulate its economic development to a higher plane. This could be discerned from its Government’s policy.
At the main CIFIT forum in Xiamen on Sept 8, vice-premier Wang Yang announced in his opening speech: “From Oct 1, we will grant equal and fair treatment to all local and foreign companies incorporated in China. Our Chinese companies will have to compete with foreign-owned companies on level playing fields in China.”
This is the “new China” exhibited at the four-day CIFIT, touted to be the largest investment fair in the world, where its products and services were displayed alongside leading products from over 50 countries at 6,000 booths.
CIFIT 2016 was organised by the central government almost immediately after China successfully hosted the G20 Summit from Sept 3 to 5 in picturesque Hangzhou, Zhejiang province, with grandeur.
The world’s second-largest economy had been hailed by world leaders for its determination to boldly tackle a number of global issues, including the economy, environment, corruption and poverty.
In fact, China has the basis to be confident.
Despite weak international conditions, flow of foreign direct investment (FDI) into the country – albeit slower – still ranks the highest in the world so far this year, according to Wang Yang.
According to Dr Huang Chenhong, president of Dell Greater China, Dell’s headquarters in the US has committed to investing an additional US$125bil (RM517bil) in China and has pledged to contribute US$175bil (RM724bil) worth of total trade as well as bring in venture capitalists.
Huang told a CEO Summit on Sept 7 ahead of CIFIT: “All this shows that Dell continues to view China’s market positively, and will deepen our root here.”
Malaysia’s Second International Trade and Industry Minister Datuk Seri Ong Ka Chuan, who was a guest of honour at CIFIT’s official opening ceremony, made this observation to Sunday Star in Xiamen:
“China has evolved. It is a much, much more confident nation now. It is ready to welcome foreign sophisticated industries to promote economic development to a higher plane, and at the same time its private industries are now prepared to venture out.”
Several years ago, only state-owned enterprises and financially-strong conglomerates were ready to expand overseas, he observed.
Citing the example of Kibing Group – China’s largest and highly automated float-glass manufacturer, Ong said this privately-owned listed company is now riding on the wave of the Belt and Road Initiative to expand its manufacturing in Malaysia, research and development in Taiwan and marketing arm in Singapore.
He also noted that while China has not signed free trade agreements with many countries, trade barriers would have to be broken down once China builds rail and other communication systems in all the 65 countries along the Belt-Road route to improve connectivity.
“While it takes 40 to 45 days to ship goods from Spain to China, it only takes a train journey of 16 days for freight from Madrid to be transported to the wholesale market in Yiwu.
“This is the power of the 21st Century Silk Road rail service under the Belt and Road Initiative,” he said.
On Dec 10, 2014, China and Spain was linked by the longest rail link in the world after a train from Yiwu in coastal China completed its maiden journey of 13,053km to Madrid. En route it passed through Kazakhstan, Russia, Belarus, Poland, Germany and France before arriving at the Abroñigal freight terminal in Madrid.
Together, the Belt and Road Initiative route covers 65 countries populated by 4.4 billion people. It has been projected that infrastructure development alone will bring in investment of US$160bil (about RM662bil) and China’s annual trade volume with Belt-Road countries will exceed US$2.5 trillion (RM10.3 trillion) in a decade or so.
The Belt-Road strategy could have as much impact on China’s internal economy as it will have internationally. One of China’s top priorities is to export industries with major overcapacity such as steel, cement and aluminium.
Datuk Ter Leong Yap, president of Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM), told Sunday Star in Xiamen: “From the three CIFITs we have participated in, we can sense that China is not only ushering in high-tech, high-value foreign investments now, but it is also encouraging its companies to go global vigorously.”
“As it has economies of scale, it is prepared to buy foreign technology and R&D (research and development) to expedite its current economic transformation.”
He noted China has gone far ahead in the development of Internet services such as e-commerce, e-trade and e-logistics; and its home-grown IT giants led by Alibaba Group and Tencent are leading the IT revolution in the world.
China is seen as building infrastructure in the Belt-Road countries now. Following this, or concurrently, is the influx of investments from its reputable high-tech and high-value industries, observed Ter.
According to Wei Jianguo, vice-chairman of China Centre for International Economic Exchanges, emerging industries that are classifed as “new China-made” are IT industry represented by Huawei, machine building sector represented by XCMG and Sany Heavy Industry, space flight and aviation, as well as bullet train and high-speed rail industries. These industries boast high technology, patents, independent innovation and top talents in the world.
“The new China-made goods not only enter into Asian and African markets, but more importantly also enter into high-end European and American markets,” Wei said in an interview with Economy and Nation Weekly.
While in many sectors China has gained global recognition, Wei noted the country is still falling behind in automobile and chips as it lacks leading enterprises and high-tech talents in these industries.
It is learnt that Chinese auto firms are now on the lookout to take over foreign car manufacturers that are armed with special technology, after the acquisition of Volvo Cars in 2010 proved highly successful in technology innovation and marketing.
Wei opined that in the next 30 to 50 years, the Belt and Road Initiative will be the way forward for successful Chinese enterprises to enter the global market for a win-win co-operation as China’s Government develops strategies with foreign nations.
According to official data, China’s direct investments in Belt-Road nations – including Malaysia – hit US$14.8bil (RM61bil) in 2015, up 18.2% from 2014.
In the first quarter of 2016, direct investments to Belt-Road countries totalled US$3.6bil (RM14.8bil), a rise of 40% compared to the first quarter of 2015. Most of these investments had gone to Singapore, Indonesia, Malaysia and India.
Ranked by Peking University as “the least investment risk” among the Belt-Road countries, Singapore is ahead of its Asean neighbours in grabbing opportunities: It has already signed with Chinese-funded banks to bring in financing worth over S$90bil (RM270bil) to finance projects for high-speed rail, ports and the communication industry in South-East Asia.
“The Belt-Road vision is that government sectors and enterprises should not seek quick success and instant profits, but should create long-term effects, benefit local enterprises, people and countries, and make China be seen to be a reliable partner,” said Wei. – ANN