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China’s Finance And Investment Outlook

It is no secret that the Chinese government plays a large hand in the countrys economic developments, currency flows, and financial investment platforms. From calling for more FDI in high value-added industries to giving access to foreign investment in only B-level shares of Chinese companies, the environment on the mainland for foreign capital investors is simultaneously encouraging and restrictive.

As China has juggled multi-faceted and often aggressive development schemes in the last few decades, the financing behind various projects has come from relatively minimal in terms of percentage and calculated allowances of shares to foreign investors by the government. Even recent numbers show less than 2 percent of foreign ownership of domestic financial assets in public projects and Chinese firms.

Yet as China promises major improvements to infrastructure, energy sources, and an overhaul of its industrial focus to high-tech and higher skilled services, the opportunities for an expanded financial sector in which foreign individuals and institutional investors can gain more pieces of the China pie are rising.

After last months approval of the 12th Five Year Plan by Chinas National Peoples Congress, nicknamed the Greenest FYP in Chinas history, and the circular on renewable energy architecture that followed shortly afterwards, new channels of investment will begin to open as China builds financing for its sustainable and renewable energy projects. China has announced it intends to lower energy intensity by 16 percent over the next five years, as well as cut CO2 emission by 17 percent and reduce industrial waste by 8 percent to 10 percent.

The continued growth potential in Chinese raw materials processing and higher value-added goods manufacturing has no doubt also fed into the need for China to expand its energy production options. From more direct sourcing of domestic raw materials for electronic components and luxury goods factories, for example, owned by both Chinese and foreign companies, to greater demand of utilities services in urban areas as the population of cities grow, the capital investments market in terms of these three segments is likely to grow exponentially.

Their expansions go hand in hand, says Stephen Couch, senior financial consultant at deVere Group Shanghai, an international financial consultancy that specializes in expatriate and foreign investor affairs.

Read the rest of this article about the China Investment Outlook by Jane Shi at China-Briefing.com. The Site is contributed to by the China business experts at Dezan Shira & Associates, which was established by Chris Devonshire-Ellis.