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Chinese investment abroad

Chinese investment abroad


According to newspaper reports, China’s National Development and Reform Commission has decided to curb ‘irrational’ investment on its various overseas mega development projects, including Belt and Road initiative, and restrict the local companies from investing abroad. However, the new guidelines would not affect the Chinese investment plans in Pakistan. Reports also suggest that Beijing would enhance healthy trade cooperation with other countries, but would curb corruption in the process of investment in overseas destinations. The government took the action after noting mergers and acquisitions by Chinese companies in the countries involved in the Belt and Road initiative and the aim of the government is to restrict the outflow of the national capital.The Chinese companies have already invested more than $18.5 billion in 20 countries to build economic and trade zones whereas the Chinese acquisitions are spreading over 68 countries as part of President Xi Jinping’s Belt and Road initiative, covering a total outlay of $33 billion. The projects include high-speed railway in Indonesia and a crude oil pipeline between China and Myanmar.

The China unveiled the Belt and Road project four years ago to boost trade and investment along two ancient routes –Silk Road, connecting China to Europe by land and sea and the second covers South East Asia and Africa. The role of Chinese companies is increasing despite government curbs on capital outflows. In a Belt and Road Initiative Summit in May last, the Chinese prime minister pledged $124 billion to partner the neighbouring countries for the plan.

There is a lesson for Pakistan. If the rules of the game can change in south East Asia, they also can also change here and the government policymakers and stakeholders must have an alternative plan without blaming the friendly country for anything and questioning its sincerity. China is a trusted friend, but it has its own issues, interests and limitations and it cannot be blamed for change of rules. We have to establish cooperation in win-win situation and without compromising on the national interests. Without going blindly into business deals with China and other trade partners, there must be a fair adoption of policies and agreements. It is better to avoid a deal which is harmful for the interest of Pakistan or China at the long run.