Zhou Xiaochuan: Providing financial support to enterprises "Going
Abroad"
Speech by Mr Zhou Xiaochuan, Governor of the People's Bank of China, at the 11th China
International Fair for Investment and Trade and the International Investment Forum 2007,
Xiamen, 8 September 2007.
* * *
Your Excellency Vice Premier Wu Yi,
Distinguished guests,
Ladies and Gentlemen,
Good morning!
It is a great pleasure to attend the 11th China International Fair for Investment and Trade and
the International Investment Forum 2007 in particular in the beautiful coastal city of Xiamen.
On behalf of the People's Bank of China, I would like to extend warm congratulations on the
convocation of this Forum.
Thanks to rapid economic globalization, the trade links between China and the rest of the
world are expanding, and investment cooperation is deepening with each passing day. Since
the initiation of reform and open-up, China has made remarkable achievements in attracting
foreign capital and learning advanced technology and management expertise from other
countries. At the same time, the Chinese enterprises are making good progress in their
endeavor to invest and operate abroad. Indeed, this "going-abroad" endeavor has become a
strategic measure of major importance as China's open-up reaches a new stage.
The financial sector has played an important role in these two-way interactions. But, the work
of financial sector is not yet sufficient, in particular in terms of supporting enterprises going
abroad. On this front, the financial sector has not fully adapted to the new developments in
implementing the strategy of going abroad. Therefore, the People's Bank of China attaches
great importance to this matter and is intensifying research and study. In the future,
measures will be taken to deepen and broaden the financial markets to satisfy demand of
enterprises for foreign exchange products and risk management instruments, and change
the foreign exchange administration policy that is strict with capital outflow and easy with
inflow; greater convenience and facility will be provided in financial services to support
enterprises going abroad in a better way.
First of all, the financial market will play a bigger role. We will actively foster foreign
exchange market growth and encourage product development to help enterprises manage
interest rate and exchange rate risks in their overseas investment and operation. In recent
years, the People's Bank of China has worked hard to foster foreign exchange market
development. The products in the foreign exchange market are increasingly diversified. With
the launch of RMB foreign currency swap transactions, and availability of future and swap
foreign exchange sale and purchase to a larger variety of enterprises, the foreign exchange
market has grown rapidly. The trading volume in the first half of 2007 was 4.5 times that in
the corresponding period of 2005. In the future, in order to support overseas investment and
operation of Chinese enterprises, we will make fresh efforts to develop the foreign exchange
market, promote products diversification, and create a more favorable environment for
instrument innovation.
Second, there will be stronger financial policy support. The foreign exchange administration
reform will be deepened by lifting unnecessary controls and simplifying procedures to provide
foreign exchange convenience to enterprises investing and operating abroad. Last year, the
quota limit of foreign exchange purchase for overseas investment purpose was abolished to
satisfy the need of enterprises in outward investment. In the next step, we will lift the control
in terms of verification of sources of foreign exchange fund, examination prior to foreign
exchange purchase, and repatriation of outward investment profit; we will allow enterprises to
conduct outward investment with their own or purchased foreign exchange, and make it more
convenient to use and transfer foreign exchange; research will be made to explore channels
for domestic enterprises and financial institutions to support enterprises investing and
operating abroad with foreign exchange.
Third, financial services will be improved to support eligible enterprises to invest and operate
in other countries. Qualified financial institutions will be encouraged to establish overseas
operations, and explore equity investment in overseas financial institutions through merger
and acquisition, in order to provide enterprises with convenient financial services in their
overseas investment and operation; enterprises investing and operating abroad are
encouraged to take advantage of financing tools in host countries such as lending, asset
securitization, stock offering, bond issue, project financing, and etc; domestic investment
entities will be allowed to provide financing guarantee to their overseas subsidiaries subject
to approval.
Fourth, regional financial platforms will be used to encourage enterprises to take part in
international economic cooperation. China is a member of various regional development
banks including Asia Development Bank, Africa Development Bank, West Africa
Development Bank, PTA Bank and Caribbean Development Bank, and has applied to join
the Inter-American Development Bank. Good cooperative relations have been developed
with these regional development institutions. The People's Bank has signed bilateral
technical cooperation agreement or established bilateral technical cooperation fund with the
Africa Development Bank, West Africa Development Bank, and Caribbean Development
Bank. It is desirable to use these regional development banks as a platform for exchanges,
and conduct project consulting and market research through bilateral technical cooperation
fund and agreements, and better understand the business and legal environment of host
countries. This will be a catalyst for the going abroad endeavor.
Promoting the two-way interaction of foreign enterprises coming to China and Chinese ones
going abroad is conducive to the economic complementarity and helps promote common
prosperity, global harmony and progress. On this front, the financial sector definitely will do a
lot more to provide support.
In conclusion, I wish the Forum a complete success.
Thank you.