'Going out' strategy
China launched the strategy of "going out" because China happened to be at that stage of its development when China ran a balance of payments surplus and accumulated huge foreign exchange reserves. We notice Germany's export is almost equivalent to China, but its foreign exchange reserve is far less than China's. The reason is Germany has done a much better job at "going out."
Western countries' "going out" strategy is much more than entrepreneurial investment; it also includes personal travel, education, consumption and many other aspects. Although China has opened the market for outbound travel, overall demand is still low. Meanwhile, only a small number of families can afford to send their children to study abroad.
Last year, China's outbound direct investment in non-financial sectors was $59 billion, while inbound direct investment China absorbed last year totaled $100 billion. China is likely to see inbound and outbound direct investment reach equilibrium in the next five to 10 years.
Nearly two thirds of China's outbound investment was concentrated in nearby countries. More Chinese enterprises are looking to invest in the United States, but so far these efforts have been riddled with setbacks, such as the failure of the deal between Huawei Technology and the U.S. 3Leaf Systems. I hope China and the United States can reach an agreement on protecting mutual bilateral investments so that China's overseas investment is protected by law.
There will always be risks to invest overseas. The guideline we follow is "government offering guidance and enterprises making decisions." In this sense, governments have three roles to play. First, we need to make enterprises fully aware of the risks involved. Since many factors are simply unpredictable, our help is often limited. Second, the government needs to enhance risk controls. Third, we need to establish and complete an emergency mechanism.