China's overseas investment set to soar, minister says

China's outbound investment is set to rise in the coming years, with its size in the next five to ten years expected to match the foreign direct investment the nation attracts, said Commerce Minister Chen Deming.

Mainland companies are encouraged to go abroad as China cannot allow its US$3.29 trillion foreign exchange reserves to depreciate further with the third round of the United States' quantitative easing, Chen said at a financial forum hosted by Caijing magazine in Beijing yesterday.

"We hope that in the next five years, China's outbound investment and FDI will largely achieve a balance," he said, adding that China is likely to spend more than US$70 billion this year on non-financial outbound direct investment.

FDI coming into the mainland totalled US$116 billion last year.

China has been encouraging companies to invest abroad ever since its foreign reserves surpassed Japan's for the first time in 2006 to become the world's largest. But its efforts have been hindered by political opposition in some Western countries afraid of losing control over resources and fear of dissimilar corporate cultures, among other things.

Chen said the ministry had been advising firms to acquire stakes in target foreign companies first, instead of trying to buy out the entire firm, to acclimatise themselves to the local legal environment and corporate culture.