bilateral trade: china's silk road. außenwirtschaft austria
TRANSCRIPT
BILATERAL TRADE
CHINA´S SILK ROAD, 16+1 STRATEGY,
CHINESE FDI IN EUROPE & AUSTRIA
A Briefing Tour d´Horizon & Update by Commissioner Schierer,
Außenwirtschaft Austria / ADVANTAGE AUSTRIA October 1st, 2015
1/18
TODAY´S #HASHTAGS
2/18
# Austria #Hongkong #China (1 slide)
#OBOR (3 slides) #16+1 (2 slides)
#FDI (2 slides)
#AUSTRIA: HONG KONG & CHINA
3/18
Bilateral Trade Development
Hong Kong
• Trade
Q1-2/2015: Austrian exports +8.8%
2014: Austria: EUR 520 m, Hong Kong: EUR 82 m
Austria´s largest trade surplus in Far East
• Austrian companies
2008: 97
2015: 230+
China
• Trade
Q1-2/2015: Austrian exports: -3.3% (ww -15.6%)
2014: Austria: EUR 3.38 bn, China: EUR 7.3 bn
Trade deficit: EUR 3.94 bn
• Austrian companies
2008: 350
2015: 470 (600)
4/18
#OBOR: ONE BELT, ONE ROAD
Definition
One Belt = Sea
One Road = Land
Huge Vision & Corner Stone of China´s Foreign Policy
Background Facts The „Silk Worm Encounter“: 4,000 years ago in China
France started in 16th century with Silk production
Re-load in 2013 by President Xi Jinping
Historic routes connecting China with Europe
To improve infrastructure connectivity
Participating countries 40-60 countries and regions
Concerns some 3 billion people
Few agreements signed so far
#OBOR: WHAT ?
6/18
What is it about ?
Network of railways
Oil and gas pipelines
Power grids
Internet networks
Investment and finance figures
Expected infrastructure costs: USD 22 trillion
Required investments p.a. till 2020: USD 730 billion
Set-up of SRF: USD 40 billion (operating)
Set-up of AIIB: USD 100 billion, 58 members (from 2016)
China spends USD 1 trillion in one decade
Expected Chinese annual trade by 2025: USD 2.5 trillion
#16+1: CUTTING OUT EU ?
7/18
Set-up
2011 kick-off in Budapest
16 Central East European countries + 1 China
Romania, Serbia, Hungary & Poland strategic partners (GER & AUT ?)
What is it about ?
Backdoor entrance into, image campaign, hub for #OBOR
Enhancing political trust between China and CEE, partial elimination of
ideological differences, lobbyist for China in EU
Exploring economic/trade potential
Creating a large number of co-operative projects
Strengthening cultural & people-2-people exchange
Projects
Investments and going out strategy
Highspeed railway Belgrad – Budapest
TRECECA - Transport Corridor Europe-Caucasus-Asia
Strengthening of Slovenian port of Kopa
#16+1: OBSTACLES A 2ND CHINAFRIC?
8/18
Obstacles
Immense diversification of the region
Barriers related to EU law
Insufficient expertise of Chinese companies
Asymmetric economic needs within 16 and 16+1
No willingness within the 16 to develop intra-co-operation
CEE is part of Europe and not part of Eurasia
NATO and security topic
A 2nd ChinAfric ?
Half hearted approach by China
Seen only as outskirts of EU
Religious, ethical issues. Cultural differences bigger than expected
Strong individuality within the 16
16 have a missconception of China (Euro crisis vs Big spender)
China nominates preferred and less preferred states
10/18
12/18
EXCURSION: DON´T BE SCARED! CHINA´S CAPITAL ACCOUNT ONLY STARTS TO OPEN UP…
Source: Hong Kong Exchange & Clearing
….in Trillion US-Dollar
13/18
CURRENT FRAMWORK SETTING OF CHINESE FDI POLICY
Favorable FDI policy High net investment amount
Among 10 largest banks worldwide: 5 Chinese
FDI investments grew 15-fold in the last 10 years
Among 8 largest Sovereign Wealth Funds: 4 Chinese
September 2014: MOFCOM eases „Overseas Investment Rules“ Only FDIs in „sensitive“ regionen and industries need approval
Approval period: 3 days, 20 days for SOE through NDRC
Fast track and high flexibility for biddings, high competitivness
Almost no check of balances for offshore investments and re-financing by SAFE, high flexibility
March 2015: „Belt & Road“-Initiative
April 2015: Premier Li Keqiang: „Charge out into the world!“
April 2015: China eases FDI regulations
Public diplomacy abroad by Chinese president Xi Jinping
4Q 2015: Establishment of AIIB
2Q 2016: 1 EU-China FDI agreement vs. 26 FDI agreements
Weak European market EUR , debt crisis, weak economy, low capitalization of companies, succession problems
Special investment programmes in Portugal, Spain, Greece
No Patriot-Act in EU, geo-economic non-strategy within EU
14/18
WHY DOES CHINA INVEST ABROAD?
Securing domestic demand and economic growth in China Raw materials, energy, agriculture, food
Support of „slow“ Chinese economy
Strengthening and expanding international competitivness through technology, Know-how and Management acquisition Nuclear energy
Automotive and Transport (Saab, Volvo, MG, Steyr Motors, Palfinger, ATB, WBL, Pirelli)
Hightech (FACC, IBM)
Consumer goods (OmniVision, House of Fraser, Huber Tricot)
Tourismus, hotels (ClubMed, Thomas Cook, PizzaExpress, Rosenberger)
Sports, Media (AC Milan, Infront)
Diversification and ROI strategy Luxury brands/ -integration (Feretti, Cerruti, Folli Folie, Aquascutum, Salvatore
Ferragamo, Pierre Cardin, French wines)
Poperty and real estate
Utilities (water, energy,…)
Banking and insurances (pension and retirement funds)
15/18
DEVELOPMENT OF CHINESE FDI (WORLDWIDE)
Chinese FDIs will continue to be stable Number of M&A will increase
In a nutshell: No more mega deals. More small and medium sized
specialised deals within the Hidden Champion group.
17/18
CHINESE FDI: BY COUNTRIES (TOTAL ASSETS IN BILLION USD, 2005-2014)
0,1
0,12
0,14
0,4
0,9
1,1
1,6
1,8
2,4
2,4
2,4
2,7
2,9
4,5
4,6
5,4
5,5
5,9
6,9
8,2
9,1
10,6
20,9
23,6
39,4
61,3
71,9
0 10 20 30 40 50 60 70 80
Tschechische Rep.
Bulgarien
Österreich
Mazedonien
Bosnien
Montenegro
Polen
Rumänien
Ukraine
Serbien
Spanien
Schweden
Weißrussland
Norwegen
Ungarn
Portugal
Griechenland
Deutschland
Italien
Schweiz
Türkei
Frankreich
Rußland
GB
Kanada
Australien
USA
Source: Heritage Foundation, American Enterprise Institute,
China Global Investment Tracker, AC Hongkong
19/18
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Christian H. Schierer
Head ADVANTAGE AUSTRIA Hong Kong
Hong Kong, Macao & South China
ADVANTAGE AUSTRIA.