Chinese companies invest heavily in Southeast Asia

Chinese investment

Chinese companies Chinese investment in Southeast AsiaChinese companies are stepping up investment in Southeast Asia as part of the government’s One Belt, One Road initiative, which aims to create a huge economic zone along new land and sea Silk Roads between China and Europe.

Direct investment by Chinese companies in 48 countries along the new Silk Roads jumped 66% year on year to roughly $12 billion in the nine months ended in September.

Anhui Conch Cement will in April start opening four plants in Indonesia with annual capacity totaling more than 12 million tons. The company, China’s second-largest cement maker, plans to begin production at a Myanmar factory in February, as well as build two plants in Laos.

Cement demand is shrinking in China as the economy cools and infrastructure investment slows. Cement production here fell 5% year over year to about 1.7 billion tons for January-September period, official data shows. With the domestic market suffering from severe oversupply, Anhui Conch is ramping up its overseas business, including exports, Chief Accounting Officer Zhou Bo said.

Shandong Sun Paper Industry will spend $290 million to build paper production facilities in Laos to tap local demand. Magang (Group) Holding has said it plans to set up a steel mill in Kazakhstan with an annual capacity of 1 million tons.

Premier Li Keqiang and other officials have visited a number of countries along the new Silk Road routes to market infrastructure such as high-speed rail and nuclear power plants. The initiative aims to use emerging countries as an outlet for excess facilities and labor in such industries as cement and steel, as well as encourage Chinese companies to go global.

While Chinese money and technology are attractive to emerging countries on the receiving end, these nations are also wary of Beijing seeking greater influence in return for investment.

Source: NIKKEI Asian Review