Overseas investors in China moving west amid financial crisis

A Hong Kong-based energy firm has located its regional headquarters in the ancient Chinese capital of Xi'an, one of the latest overseas companies to seek opportunities in western China amid the global financial crisis.

 

Eco Service Management Company Ltd., a wholly-owned subsidiary of the Hong Kong and China Gas Company Limited (Towngas), set up its regional headquarters at a high-tech zone on the outskirts of Xi'an last week, said Song Haiyang, spokesman of the high-tech zone.

 

It was the first overseas company to locate regional headquarters in Xi'an, Song said Monday.

 

Alfred Chan, managing director of Towngas, said he and his colleagues were impressed with the infrastructure in Xi'an and services offered at the high-tech zone.

 

Chan said Eco Service would handle all the business of its parent company, the Hong Kong-registered Eco Environmental Protection Investment Company, in China's interior regions, including the exploitation and use of coal bed methane and natural gas, coal-based energy and chemical engineering.

 

Prior to the establishment of the Xi'an branch, Eco Service had reached energy investment agreements with partners in Shaanxi, Guangdong and Jiangsu provinces as well as Inner Mongolia Autonomous Region, with a combined value of 15 billion yuan (2.15 billion U.S. dollars), said Chan.

 

The company plans to invest another 15 billion yuan in the interior regions in the coming five years, he said.

 

While the global financial crisis has shut down many foreign-funded businesses along China's southern and eastern coasts since last year, a growing number of investors are moving westward to seek opportunities.

 

Last month, ABB, a leading power and automation technology group, announced the opening of a new engineering center in southwest China's Chongqing municipality.

 

Tobias Becker, head of the Process Automation Division for ABB North Asia Region and ABB China, said the center would consolidate the strategic importance of Chongqing in the company's overall business deployment.

 

China has more leeway for investors in time of the financial crisis, given its huge market demand and vast expanse of territory, said leading economist Hu Angang. When the east gets dark, the west offers some light.

 

China's decade-long policy to foster development in its western regions was beginning to pay off, said Prof. Yin Xingmin with the Shanghai-based Fudan University. Expansion of fixed asset investment has improved infrastructure and narrowed the gap between China's east and west.

 

As a result, several western provinces and regions were expecting to outpace the national economic growth this year, he said. The northwestern Shaanxi Province, for example, is aiming at a 13-percent growth rate this year, compared with the 8-percentprojected national GDP growth.

 

Shaanxi vice governor Zhao Yongzheng said the confidence was fueled by the growing number of investment projects, including 42 energy projects with a combined value of 42.8 billion yuan a year, 27 equipment manufacturing projects valued at 7.4 billion yuan a year, 10 high-tech projects of 1.3 billion yuan and 37 infrastructure construction projects with 40.8 billion yuan of annual investment.

 

Some observers, however, warn that western China should not be too optimistic. The western regions generally lack the economic capacity and competitiveness to tackle the financial crisis, said Du Ying, deputy head of the National Development and Reform Commission (NDRC). They will need more efforts and longer time to shake off the impact.

 

Compared with wealthier eastern provinces, the fledgling, singular and very often resource-based economies of western regions were more fragile in the global downturn, said Shi Ying, deputy head of the Shaanxi Provincial Academy of Social Sciences. Some businesses are already feeling the chill.

 

He cited the Fast Group, the province's leading auto equipment producer and exporter, which reported an 80-percent drop in orders in the first quarter.

 

Lack of orders and falling prices on the international market had caused many resource-based companies in western China to cut production, or even close down, he said.

 

Nearly all the western provinces and regions need to transform from resource-based and singular economies to more sustainable and diversified patterns, said Shi.

 

While Shaanxi was fostering high-tech industries, its western neighbors Gansu and Xinjiang were exploiting wind power hoping to parallel the Yangtze's Three Gorges Dam in terms of power generating capacities, he said.

 

The impact of the financial crisis on western China is sometimes indirect and gradual, said NDRC's deputy head Du Ying. The western regions need to overhaul their industries and expand cooperation with the eastern provinces to solve their common problems.

 

Source: Xinhua