<mark>manufacturers relocate overseas; some expressed the concern that this may have a negative impact on the local GDP and job market at a time when these were already constrained by the recent decline of the export market.</mark> There has been increased recognition in China that the trend towards more competitive outbound investment, led by private forces, is inevitable as China further integrates itself into the world market of trade and investment. Ge Shunqi, professor of the Institute of International Economics at Nankai University, pointed out that the increased private involvement in going global indicates “a very important structural improvement in China's ODI.” Compared with the resource-driven outbound investment dominated by large state-owned enterprises, OFDI led by private enterprises reflects the real competitiveness of China, argued Ge.<sup>22</sup> The view was shared by Liang Yutang, deputy head of China Minsheng Bank, who said "Private companies are more dynamic than State-owned ones and have become an emerging force in the overseas investment market." His bank reportedly plans to create a $10 billion fund to help private enterprises invest overseas over the next three years.<sup>23</sup> Some government think-tanks have agreed. Zhang Jianping, a researcher with the Academy of Macroeconomic Research under the NDRC, said “encouraging more private and small and medium-sized enterprises to engage in foreign investment is a way to counter the skepticism and restrictions that China's State-owned enterprises often encounter (overseas).”<sup>24</sup> The findings of this study support these views. As evident in the company interviews, many manufacturing firms have moved overseas in response to changing market conditions both at home and in the world. Many of them are from coastal China, where export-oriented activities have been developed competitively in the past decades. However, such activities are now under pressure from increased production costs, including wages, land/office rents, and international shipping.<sup>25</sup> The appreciation of the renminbi has made export-oriented businesses even more expensive. As a result, many coastal firms face a real danger of losing their competitiveness unless they upgrade or relocate. Government policy-makers would do well to help with the transition rather than trying to prevent something that is irresistible.

One effective way for the Chinese government to support this transition is through an effort to help private firms access capital. As seen in the study, many small and medium sized private firms are highly efficient and financially viable. Supporting their overseas ventures not only 22 <mark>See</mark> _<mark>China Daily</mark>_ <mark>, “ODI surges in H1 as companies go global,” 2012-07-18;</mark> http://www.chinadaily.com.cn/business/2012-07/18/content_15594183.htm 23 <mark>See</mark> _<mark>China Daily,</mark>_ <mark>“Chinese firms' push into global market,</mark> _<mark>2012-12-04;</mark>_ http://usa.chinadaily.com.cn/business/2012-12/04/content_15982777.htm 24 <mark>See</mark> _<mark>China Daily</mark>_ <mark>, “Govt stresses quality for FDI, ODI”; 2012-07-27; byZheng Yangpeng ( China Daily); http://usa.chinadaily.com.cn/business/2012-12/04/content_15982777.htm</mark>

> 25 Since 2010, minimum wages in nine of twelve coastal provinces (including Beijing) rose by an average of more than 21%. Land price in Zhejiang province tripled since 2007.

40