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Guangming Daily: State-Owned Enterprises Should Learn to Avoid Risks in Overseas Investment

A recent Guangming Daily commentary advises that state-owned enterprises should learn to avoid commercial and political risks when making overseas investments. Among the US$18.8 billion worth of contractual projects of Chinese enterprises in Libya, commercial insurance only covered less than 400 million Chinese yuan (US$61.50 million) of the loss. The rest of the investment in Libya has been “left to God’s mercy.” 

The article said, “in a country with an immature market, the big hand of government still influences the economy. When the government is stable, the risk is controllable. To make money in such a country, as long as one holds onto the big hand of government, everything – winning projects, making investments, and obtaining loans – falls into place. … Once the big hand of government is crippled due to political changes, all the ‘hands’ holding that hand will inevitably become empty.” 
At the end of 2009, the state-owned enterprises had 6,000 branches overseas with total assets of over 4 trillion yuan (US$615.62 billion). From 2010 to the present the period of Chinese companies investing overseas peaked.

Source: Guangming Daily, May 23, 2011