Chinese think tanks also need to 'go out', to raise the quality of their work

Yan Shaohua says the country's growing investments abroad must be guided by good risk analysis - a challenge its experts cannot meet without on-the-ground experience

PUBLISHED : Thursday, 16 July, 2015, 10:30am
UPDATED : Thursday, 16 July, 2015, 10:30am

In recent years, Chinese investments overseas have increased rapidly, following China's entry into the World Trade Organisation and Chinese companies' "going out" strategy. This phenomenon is probably going to be accelerated by President Xi Jinping's "one belt, one road" initiative.

At the EU-China summit at the end of last month, the decision by the two sides to develop a co-investment vehicle is but one example of China's ambition to continue its march into one of the world's most developed markets.

The path for Chinese companies that have "gone out" has not been totally smooth. Earlier this year, the Greek government's threat to suspend privatisation of the Chinese-funded Piraeus port and the new Sri Lankan government's decision to review a China-backed port city project were reminders to Beijing of the potential political risks ahead.

The shockwaves these cases have created in the Chinese media also indicate that there is a lack of systematic analysis of the risks "in the "one belt, one road" countries, a role that could be played by Chinese think tanks - provided that they, too, "go out".

Risk analysis of Chinese investment overseas requires empirical knowledge, information and data about the foreign environment. Beijing largely realises this, as evidenced by its call last year to develop "new types of think tanks with Chinese characteristics", with a view to providing intellectual support for its national and global governance. Consequently, a large number of new think tanks have been established in China, leading to a "Great Leap Forward" in their development.

However, the quality of their output is far from sufficient to cater to the realities. Chinese thinks tanks have been trying to carry out risk assessments of the countries along the "one belt, one road", but much of the analysis is superficial and blind, as it is done behind closed doors, inside China.

Therefore, to improve the quality and credibility of their analysis, China's think tanks have to "go out" and acquire on-the-ground knowledge of the local environment. By doing so, they should be able to analyse not only the potential risks for the "one belt, one road" project, but also the political influence and impact of China's overseas economic activities, which to a large extent determine the success of China's foreign investments.

Another reason for China's think tanks to "go out" is to better communicate Beijing's policies to the outside world. The "one belt, one road" project again highlights the inability of China's think tanks to address the concerns of foreign players. Despite the fact that the project requires the contribution and cooperation of various foreign countries, China's thinks tanks have mostly focused their attention on interpreting the official line to the domestic public. As a result, while there are heated discussions in China, European countries on the other end of the project remain confused about the meaning and essence of "one belt, one road".

In the project's official action plan, policy coordination is emphasised as one of the five cooperation priorities. Here China's think tanks could play an important role in policy exchange and communication, which is essential to reach a consensus with countries along "one belt, one road". This role could be better performed by engaging with local thinks tanks in the countries concerned.

Last, but not least, "going out" is also an opportunity for China's think tanks to reform themselves, thus realising the goal of establishing "new types of think tanks". Here "going out" does not mean visiting foreign counterparts, but establishing branches overseas like Chinese companies have done.

One of the main problems of Chinese think tanks is inefficient administration and management. A "going out" strategy would position them to directly cooperate and compete with international partners, forcing them to reform and finally improve their quality and competitiveness.

Yan Shaohua is a PhD candidate of European studies at the University of Hong Kong