Economy

Growing ODI boosts regional cooperation

By Zhou Siyu (China Daily)
Updated: 2011-04-14 09:29

A security guard stands in front of a floral arrangement ahead of the BRICS Summit in Sanya, Hainan province. BRICS member nations accounted for 18 percent of global GDP in 2010, and trade volume between the countries has increased with an average growth rate of 28 percent in the past 10 years.[Photo / Agencies]

BEIJING - China's growing overseas investments to other emerging markets will further boost regional cooperation, which may help stimulate the world's economic recovery, economists said on Monday.

The nation has increased it overseas direct investment (ODI) to other emerging economies in recent years.

In 2010, its ODI to Brazil saw a 50-fold jump from 2009 to $17 billion, accounting for one-third of Brazil's investment inflows, according to the Chinese Ministry of Commerce.

Its ODI to Russia also surged by 59 percent year-on-year to $260 million during the first six months of 2010, the ministry said.

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Sang Baichuan, director of the Institute of International Economy at University of International Business and Economics in Beijing said China's investments will help further the economic development of the BRICS countries - Brazil, Russia, India, China and South Africa.

"China's investments have helped create more jobs, improve infrastructure and increase people's incomes in the local markets," he said.

Meanwhile, China's investments have expanded to new sectors besides the traditional mining, manufacturing and labor-intensive industries.

In Russia, cooperation between the two countries has expanded to include sectors such as transportation, telecommunication, and technological research and development.

In India, bilateral investments tap into sectors including pharmaceutical, software and new materials.

Yang Lihua, director of the Center of Southern African Studies at the Chinese Academy of Social Sciences, said that China's investments in South Africa have increased the country's industrialization.

"Besides more jobs and better infrastructure, Chinese companies brought in their experience and advanced technologies in manufacturing and processing industries," she said

While developed economies are still working on recovery, BRICS countries have emerged as the new engine driving the world's economy.

Over the past decade, the emerging economies registered an annual economic growth rate of more than 6 percent on average - China more than 10 percent, India more than 7 percent, Russia more than 6 percent - compared with an average of 2.6 percent in developed economies and the 4.1 percent global average increase.

By 2015, the combined output of BRICS countries is expected to exceed that of the United States, with the total value of their gross domestic product (GDP) accounting for more than 22 percent of the world's total, according to a report released by the Chinese Academy of Social Sciences on April 7.

The report also cautioned that the emerging economies should pay more attention to cooperation and foster more trading partners, instead of growing too dependent on developed economies.

Huo Jianguo, director of the Chinese Academy of International Trade and Economic Cooperation, a think tank affiliated with the Ministry of Commerce, advocates for more investments among BRICS countries.

"A mechanism should be established to boost investments among BRICS countries and increase their economic development," he said.

"This will help spur the world's economic development," he added.

China's ODI surged by 13.1 percent year-on-year to $5.27 billion during the first two months this year. Authorities are confident that it will continue to grow in the long term because of "the growing competitiveness of Chinese companies", Yao Jian, a spokesman for the Ministry of Commerce, said on Tuesday.