Analysis Of China's Finance Outward Foreign Investment

Along with the acceleration of international division, the relationships of countries are strengthened day by day; international trade has become not only an important way of participating into the global economy, but also the symbol of one countries'economic development level, opening level to the outside world and the competitiveness.Since the 1980s, China has joined in the foreign investment troop with the capital accumulation and economic enhancement. Outward foreign direct investment, for example, Ministry of Commerce of People's Republic of China announced in"2006 Statistical Bulletin of China's Outward Foreign Direct Investment"that China's outward FDI net flows in 2006 reached 21.16 billion US dollars, accounting for 2.72% of the total global outward FDI, ranked 13th in the world. However, the outflows of finance outward foreign investment was really small compared with the huge total outward FDI.From a strategic point of view, countries of strong economic power all have huge foreign investments, of which finance outward foreign investment accounts for a fairly large proportion. In order to transform China's economy to a mature one, we must develop the capital market and enhance its international competitiveness, and to continue to develop finance outward foreign investment foreign investment on the basis of foreign investment.From an investment perspective, the huge difference between deposits and loans of domestic financial institutions and huge foreign exchange reserves require us to expand our financial investment abroad. In fact, with the recovery of China's capital market in 2006-2007 and the relaxation of foreign investment policies, China's finance outward foreign investment grows rapidly, the outflows of finance outward FDI reached US$ 3.53 billion in 2006, accounting for 16.7%of the total FDI, also from 2006, a new product-QDII joined in the financial investment team, started to step out of China and look for the investment opportunities around the world; In 2007, China's Sovereign Wealth Funds- China Investment Corp began its first investment. We can predict that, the scale of China's finance outward foreign investment will maintain a sustained growth as the development of China's economy and the accumulation of the financial institutions'experiences. To some extent, that's why we research finance outward foreign investment instead of FDI, I intend to study China's finance outward foreign investment in detail. To understand the necessity and imperatives of finance outward foreign investment can contribute to China in several aspects, for example, we can benefit from the global economic growth, expand the international influence of China's financial institutions, also China's capital market will grow much healthier and faster, besides, its"human capital accumulation effects"can alleviate China's present situation of lacking finance talented person. What's more important, through finance outward foreign investment, the pressure of China's huge scale of foreign exchange reserve can be alleviated, thus may reduce the anticipated appreciation of Renminbi, which is advantageous to the healthy and sustainable development of our national economy. Actually, our country's finance outward foreign investment has gained great achievements in recent years.Although China's finance outward foreign investment develops quickly, risks and problems still exist. On the one hand, the exchange rate risk, market risk and credit risk of the global financial market has increased the difficulty of investing. On the other hand, the investment experience of China's finance institutions is defective, and cannot use the financial derivative instrument skilled, which leads us to a passive position when facing the mature investors coming from USA and Europe. As the foundation of China Investment Corp, the political risk of Sovereign Wealth Funds draws great attention, which is certainly an obstacle to the foreign investment of China Investment Corp. what's more, the QDII of China repeatedly breaks its net value, how to keep and increase its value in the world capital market is becoming an important challenge of China's Financial institutions.The studies on China's foreign investment particularly foreign direct investment have been relatively mature, but almost no research on Finance Outward Foreign Investment, On the one hand, due to the imperfections of the statistical system, China's financial industry has no precise statistics, although China's Ministry of Commerce started the introduction of FATS in service industry, however, according to"China's Service Trade and Development Report 2007"released by the Ministry of Commerce recently, only the number of China's foreign subsidiary bodies in non-financial services areas are published, but no exact financial statistics. On the other hand, China's finance outward foreign investment develops quickly only in recent years, the related research has not kept pace with it.This paper carries on a thorough and empirical analysis to China's finance outward foreign investment situation. The concept of foreign investment, FDI are briefly given, the necessity of China's finance outward foreign investment is also introduced. The main points are the forms of China's finance outward foreign investment, which we analyzed in detail. Then we propose some suggestions.There are five chapters in the paper.The first chapter introduced the background of this paper, its creativity and weakness.The second chapter"The State of China's Finance Outward Foreign Investment"is the foundation of this paper. Firstly it defined the concept of FDI and finance outward foreign investment. Then introduced the state and character of China's finance outward foreign investment in three points: the investment body, the investment form and the investment region.The third chapter is the most important part of this paper, analyzed the main forms which are Finance outward FDI, QDII and Sovereign Wealth Funds of China's finance outward foreign investment in detail, their scale and investment trends are also studied, to explain thoroughly, the corresponding cases have been given.The fourth chapter elaborated the risks China's Finance Outward Foreign Investment faced in the global economy.We gave some suggestions to China's finance outward foreign investment in the last chapter...