Weekly roundup; China-US Strategic Dialogue, shadow banking, etc.

 •  Filed under China

China’s outward foreign direct investment

China’s outbound foreign direct investment (ODI) may have exceeded inbound foreign direct investment (FDI) for the first time in 2014, according to the Ministry of Commerce of the People’s Republic of China (MOFCOM). This result is remarkable because it implies that China may have already become a net exporter of FDI, something surprising given the country’s stage of development

China’s Debt Bomb

China’s total borrowing soared to 282 percent of GDP by the middle of 2014 from 158 percent in 2007, according to a McKinsey estimate. That’s the fastest buildup of any emerging market and almost doublethe increase in the U.S. and U.K. in the run-up to the 2008 financial crisis. It could be an even bigger problem than the numbers indicate. The frantic pace of new lending means it’s hard to figure out how many loans aren’t being repaid. Regulatory loopholes and widespread shadow banking practices complicate the picture. And under a murky system of implicit guarantees, it’s not clear how much of the debt is backed by the government, or who would be allowed to go bust.

Issues ahead of the China-US Strategic and Economic Dialogue

The seventh China-US Strategic and Economic Dialogue and the sixth China-US High-level Consultation on People-to-People and Cultural Exchanges will both be held in Washington on June 23 and 24, Foreign Ministry spokesman Lu Kang said on Friday. The events come three months ahead of President Xi Jinping's expected first state visit to the US in September.

Climate change, entrepreneurship, sea protection and expanded exchanges of talent are likely to be the highlighted points, according to senior officials and experts at the Lanting Forum, held on Friday by the Foreign Ministry's Public Diplomacy Office.

Investment in China's Ed-Tech Market Is Surging, Report Says

Ed-tech companies based in China drew in $321 million in equity investments in 26 deals in 2014, CB Insights found. ... Since 2014, the largest investment in a Chinese ed-tech company has been $100 million poured into the Tutor Group, described by CB Insights as an e-learning provider specializing in training in the English language, as well as Mandarin. The investors included Alibaba Holdings

Venezuela Oil Loans Go Awry for China

In recent months, CDB has extended loan maturities and eased repayment terms, allowing the country to send it less oil than agreed and to pay bolivars instead of hard currency into a mutual-development fund intended to finance projects there. As other investors flee amid triple-digit inflation and social unrest, Venezuela has become more dependent on CDB.

U.S. diplomats to skip Chinese-owned Waldorf for U.N. General Assembly

Railways

Concerns about the Twin Ocean Railroad

Mega-projects like Twin Ocean have “a history of human-rights and environmental abuses by both companies and the state,” says Julia Mello Neiva of the Business & Human Rights Resource Centre. This ties into a tendency of “not respecting indigenous or traditional population’s rights” and “lack of adequate consultation” with local communities. In Peru, according to China Dialogue, “there are more than 600 indigenous communities of different language groups that stand to be affected by the project including around 15 living in voluntary isolation.”

Spanning 4,400 kilometers of Brazilian territory, the railway would penetrate delicate, often weakly protected ecosystems.

China to Design New Russian High-Speed Railway

China has signed up to design a high-speed railway between the Russian cities of Moscow and Kazan ... Once the designs are developed, a separate tender will be held for the actual construction of the rail link, which Russian Railways expects to cost 1.06 trillion rubles ($19.5 billion). It is “likely” China’s rail developers will land that massive contract as well, but it isn’t guaranteed, Russian Railways President Vladimir Yakunin said in an interview Friday at the St. Petersburg Economic Forum.

... [China] is trying to sell its high-speed rail installations abroad for the first time after building many domestically, but so far has found little success, with deals in Mexico and Thailand running into problems. The push to make China’s high-speed rail business international is part of a broader, long-term effort by Beijing to start exporting more sophisticated technology, rather than basic manufactured goods.