China's Belt and Road Initiative specifically states that Fujian is to become the core area of the "21st Century Maritime Silk Road". One of the goals of the Fujian Free Trade Zone (FJFTZ) [1] is to expand exchanges and cooperation with countries and regions along this Maritime Silk Road route, both in depth and breadth.

In fact, Fujian was not only the main starting point of the ancient maritime Silk Road, but is an important province in China for international trade and co-operation today. The province is also home to ports forming China’s Southeast International Shipping Centre. As such, Fujian is striving to cement closer ties with the ASEAN countries, the Middle East and countries along the coast of the Indian Ocean in the hope of further expanding investment and trade in these regions.

The keen demand for relevant support services will provide ideal opportunities for companies intending to tap the Belt and Road initiative.

Fujian is stepping up connections with countries along the Maritime Silk Road

One of the goals of the FJFTZ is to tap opportunities arising from the 21st Century Maritime Silk Road

Fujian - Core Area of 21st Century Maritime Silk Road

Vision and Actions on Jointly Building the Silk Road Economic Belt and 21st Century Maritime Silk Road [2], issued by the Chinese government called for efforts to accelerate the building of the Belt and Road. It makes clear that China will support Fujian province in becoming a core area of the 21st Century Maritime Silk Road and strengthen port construction in coastal cities, such as Fuzhou, Xiamen and Quanzhou in Fujian and in other provinces. Fujian is to become the main force in the Belt and Road initiative, particularly the building of the 21st Century Maritime Silk Road, and leverage the unique role of overseas Chinese and the Hong Kong and Macau Special Administrative Regions in advancing the Belt and Road development strategy.

Fully-automated container terminal at the FJFTZ’s Xiamen Area

In line with Vision and Actions, Fujian issued an implementation plan in November 2015 in order to develop the province as the core area of 21st Century Maritime Silk Road [3]. On the other hand, the FJFTZ made it a goal to tap the Maritime Silk Road opportunities, including the development of the Majiang sub-zone of the Fuzhou Economic and Technological Development Zone [4] inside the FTZ into an important platform for trade and for the exhibition and exchange of cultural and creative products and other commodities. The FJFTZ will explore innovative modes of cooperation and broaden cooperation with countries and regions along the Maritime Silk Road in such areas as investment, trade, shipping, infrastructure, technology, and cross-border trade settlement in Renminbi.

[For more information about the FJFTZ, see Tapping the Cross-Strait and Maritime Silk Road Opportunities of Fujian Free Trade Zone]

Fujian is an important province for China's economic cooperation with foreign countries. Its trade, investment and industries have seen sustained growth in recent years. It has a mature manufacturing sector including textile, garments and accessories (with industrial added value accounting for 10.1% of GDP in 2014), leather goods and shoe-making (9.1%), non-metal mineral products (7.6%) and computer, telecommunications and electronic equipment manufacturing (6.9%). Its service industry is also gradually maturing. In terms of industrial added value in 2014, its real estate and financial sectors had an 11.4% and 15.2% share of the province's services industry respectively [5]. A robust economy makes Fujian an important hub for promoting cooperation between China and countries along the Maritime Silk Road.

What merits attention is that while implementing the Haixi (or Western Taiwan Straits) Economic Zone development strategy and exploiting its favourable geographical location to promote cross-Straits economic development, Fujian also makes full use of its open policy and port facilities to strengthen foreign trade and investment with other regions. The port of Xiamen, home to the China Southeast International Shipping Centre, is the key port for vessels heading to Taiwan and other overseas countries. As the world's 17th largest container port, it handled 200 million tons of cargoes in 2014, with container throughput reaching 8.57 million TEUs. Cargo handling is expected to soar to 300 million tons by 2018, with container throughput reaching 12 million TEUs. Meanwhile, the port of Fuzhou has also joined the ranks of "100-million-ton class port" and become one of China's hub ports. Its Jiangyin port area with 250,000-ton class berths now ranks among the world's top 100 container ports.[6]

Fujian has frequent trade exchanges with Southeast Asia, South Asia, the Middle East and other regions. In particular, the ASEAN member states along the Maritime Silk Road have become Fujian's second largest trading partner after the US. Fujian-ASEAN bilateral trade amounted to US$18.1 billion in January-September 2015. On the other hand, ASEAN is Fujian's fourth key source of foreign direct investment (FDI) besides being the second main destination of outbound direct investment for Fujian province and Fujian enterprises.[7]

Fujian is also an important hometown of overseas Chinese. The Fujian provincial government estimates that there are currently over 12 million overseas Chinese of Fujian origin living in various parts of the world. Of this number, 80% are living in Southeast Asia. Among the 20 million-plus overseas Chinese living in the ASEAN countries, nearly 10 million came from Fujian. Fujian also has considerable social connections with countries further away. For example, about 50,000 Arabs are currently living in Quanzhou. Under the Belt and Road initiative, these trade, economic and social connections become favourable factors for the Fujian province, and hence the FJFTZ to further develop economic and trade ties with countries along the Maritime Silk Road.

Advancing Business along the Maritime Silk Road

Fujian is planning all kinds of business activities and projects under the Belt and Road development strategy. It hopes to further connect with countries along the Belt and Road and become an important pivot for economic cooperation among the Maritime Silk Road countries. While promoting bilateral trade and investment with ASEAN countries, the province is also actively opening up new markets in South Asia, West Asia, the eastern coast of Africa and other countries along the coast of the Indian Ocean and beyond. The specific measures include:

• Strengthening cooperation with ASEAN countries in the construction and management of facilities such as ports, logistics parks and cargo distribution centres.

• Accelerating the construction of China’s Southeast International Shipping Centre in Xiamen, including the construction of key port areas as well as the construction of an international container trunk line hub port and a regional cruise liner home port.

• Making deployments for airport construction, accelerating the airport expansion projects and development of airport economic parks in Xiamen and Fuzhou, and increasing international routes serving countries in Southeast Asia, South Asia and other regions.

• Promoting the construction of a cross-border optical fibre telecommunications network and cross-border e-commerce and logistics information platforms for trade with ASEAN countries, perfecting the customs clearance mechanism, and promoting information connectivity, customs clearance of goods and facilitation of people-to-people exchanges in regions along the Maritime Silk Road.

• Making positive use of the investment facilitation and liberalisation measures offered by the FJFTZ to strengthen exchanges and cooperation with countries along the Maritime Silk Road.

• Broadening two-way investment channels, guiding foreign investment into Fujian's leading industries, new and high-tech industries, modern services and energy-saving and environmental protection industries, supporting qualified domestic enterprises to build economic and trade cooperation areas and bases for trade logistics, production and processing of raw materials and production of traditional leading products abroad, and promoting two-way investment.

• Promoting development of the China-ASEAN Marine Product Exchange.

  The port of Mawei in Fuzhou is a major distribution centre for fish caught by Chinese ocean-going vessels, as well as an important port for the import and export of marine products. Over 300,000 tons of fish caught by ocean-going vessels cleared customs at Mawei each year, with annual turnover exceeding Rmb30 billion. The China-ASEAN Marine Product Exchange at Mawei has China's one and only dedicated fishing wharf with direct access to a marine products market, in addition to a robust cold-chain logistics system. Its platform for "online transaction, offline delivery and cross-border settlement" of bulk spot marine products can provide the China-ASEAN marine economy industry chain with unified standards for the orderly and traceable transactions of marine products and promote the development of the fishing industry in both China and the ASEAN.

• Accelerating the construction and utilisation of the Fujian Commodity City outlets in Krasnodar (in Russia), Poland and other countries, and guiding enterprises in "going out".

• Actively take part in the UN Maritime-Continental Silk Road Cities Alliance to promote trade and investment among Silk Road cities.[8]

New Opportunities for Fujian-Hong Kong Cooperation

Fujian needs all kinds of professional services in trying to strengthen trade ties with countries along the Maritime Silk Road and promote outbound investment by enterprises in these countries. This will be a perfect chance for Hong Kong companies intending to tap opportunities arising from the Belt and Road initiative. In fact, Hong Kong is not just Fujian's major trading partner but is also its largest source of FDI, as well as a key destination for its outward FDI.

The flow of foreign investment from Hong Kong to Fujian amounted to US$4.52 billion in 2014, accounting for 63.5% of utilised FDI in the province. Investment mainly went to the manufacturing, wholesaling and retailing, and real estate sectors in cities like Xiamen, Quanzhou and Fuzhou. In the same year, Fujian's direct investment in Hong Kong reached US$1.23 billion, accounting for 44.4% of the outbound direct investment from the province.[9] Besides investing in the Hong Kong market, most of these funds are using Hong Kong as a springboard to invest in other regions overseas.

During a business promotion highlighting Fujian-Hong Kong cooperation held in Hong Kong in June 2015, the Fujian provincial government indicated its hope to make greater use of Hong Kong's advantages in developing the FJFTZ and promoting the building of Fujian as a core area of the 21st Century Maritime Silk Road.[10] In fact, Hong Kong is not just a regional commercial and trading centre but can provide extensive professional services in such areas as finance, logistics and law to enterprises in Fujian and in countries along the Maritime Silk Road and beyond with its leading edge in the services industry. Also, as the first port of call for professional services for mainland enterprises, Hong Kong can effectively promote their "going out" efforts and help them make the best of opportunities arising from the Belt and Road initiative. Fujian enterprises resolving to step up their development of trade and investment with countries along the Maritime Silk Road provide a perfect chance for Hong Kong companies intending to tap opportunities arising from Belt and Road initiative.

[Note: For more details concerning Hong Kong's support for mainland enterprises in their outbound investment, see Outbound Investment of Chinese Enterprises: Hong Kong the First Port of Call for Professional Services.]

[1]  The Fujian FTZ in this report refers to the China (Fujian) Pilot Free Trade Zone.

[2]  This document was jointly issued by the National Development and Reform Commission, Ministry of Foreign Affairs and Ministry of Commerce in March 2015.

[3]  For details, please see HKTDC’s Business-Alert China article: “Fujian Announces Core Area Construction Plan for 21st Century Maritime Silk Road” (25 November 2015)

[4]  The Majiang sub-zone is part of the Fuzhou Sub-zone of the Fujian FTZ and includes the 0.6 km2 Fuzhou Free Trade Zone.

[5]  Source: Fujian Statistical Yearbook 2015

[6]  Source: Xiamen Port Authority and Fuzhou City Bureau of Commerce

[7]  Source: Fujian Provincial People's Government

[8]  The UN Maritime-Continental Silk Road Cities Alliance is a joint initiative by the UN Office for South-South Cooperation (UNOSSC), UN Development Programme (UNDP), UN Industrial Development Organisation (UNIDO), UN Educational, Scientific and Cultural Organisation (UNESCO), UN World Tourism Organisation (UNWTO) and China International Center for Economic and Technical Exchanges. It aims to facilitate the coordination of policies, building of partnerships, formulation of initiatives and access to finance, leading to intensified trade, investment and exchange among participating cities.

[9]  Source: Fujian Statistical Yearbook 2015; Hong Kong and Macau Section of the Department of Commerce of Fujian Province

[10]  For more information on the "Presentation on Fujian-Hong Kong Cooperation", see article in Chinese published on the website of the Department of Commerce of Fujian Province on 5 June 2015: .

China is now the world’s third largest source of foreign direct investment (FDI). In recent years, the Chinese government has substantially relaxed the relevant administrative measures for dealing with overseas investments and introduced the Belt and Road development strategy in order to strengthen economic co-operation with the regions concerned. In light of this, China's level of outward investment will further expand, while its investment in countries along the Belt and Road is expected to show sustained growth.

Hong Kong is the preferred services platform for China’s outward investment activities and has provided a full range of professional services for mainland enterprises looking to invest abroad. In particular, it has specialised in providing assistance in the areas of finance, law, tax, the risk assessment of sustainable operations, and international testing and certification, among others. As the mainland accelerates the pace of its “going out” activities and advances the Belt and Road initiative, more business opportunities will inevitably become available to services practitioners in Hong Kong.

Hong Kong is the preferred services platform for China's outward investment.

Hong Kong provides a full range of professional services for Chinese enterprises looking to invest abroad.

Outward Investment on a Steady Rise

China’s overseas investment activities have continued to grow in recent years, making the country one of the leading sources of global FDI. According to the latest figures from the United Nations Conference on Trade and Development (UNCTAD), China’s total outward FDI rose from about US$101 billion (US$107.8 billion, according to China) in 2013 to an estimated US$116 billion [1] in 2014 (US$123.1 billion, according to China), placing it behind only the US and Hong Kong [2]. This has made China the world’s third-largest source of FDI for three consecutive years, starting from 2012.

In recent years, China has substantially relaxed its outbound investment management procedures and actively built platforms to help more businesses in order to “go out” and co-operate with foreign partners to transform and upgrade themselves. In particular, the resolution  adopted by the Third Plenary Session of the 18th CPC Central Committee at the end of 2013 proposed that, in order to meet the needs of economic globalisation, China should continue opening up both internally and externally and combine the strategies of “going out” to invest overseas with “bringing in” the advantages of foreign partners to achieve the most effective allocation of international and domestic resources.

The National Development and Reform Commission (NDRC) subsequently issued the Administrative Measures for the Approval and Record Filing of Outbound Investment Projects. This greatly narrows the scope of investment requiring the approval of the departments concerned. As of May 2014, general outbound investment projects with an investment level of less than US$1 billion only require filing in terms of a record being kept. At the end of 2014, the NDRC announced the scrapping of approval for general outbound investment projects with an investment of more than US$1 billion (except for projects involving sensitive countries, regions and sectors) [4]. Since then, record filing has replaced approval for all general outbound investment projects, unless those involve sensitive countries, regions or sectors.

Belt and Road: A Long-term strategy and a Boost to Investments

China is now promoting the Belt and Road initiative, an external development strategy centring on the Silk Road Economic Belt and the 21st Century Maritime Silk Road. In March 2015, China issued Vision and Actions on Jointly Building the Silk Road Economic Belt and the 21st Century Maritime Silk Road (Vision and Actions). This proposed the acceleration of the Belt and Road Initiative in order to encourage countries along the routes to achieve economic policy coordination, promote the orderly and free flow of economic factors and undertake a more efficient allocation of resources and a deeper integration of the relevant markets. The ultimate aim is to create an open, inclusive and balanced regional economic co-operation architecture that is of benefit to all parties concerned.

The Vision and Actions document stresses that investment and trade co-operation are the key requirements for building the Belt and Road. In line with this, China hopes to work with the countries along the Belt and Road to improve bilateral investment and trade facilitation, and to remove any investment and trade barriers. The purpose is to create a sound business environment within the region and in all of the relevant countries. Hence, considerable emphasis will be placed on pushing forward negotiations with regard to bilateral investment protection and double taxation avoidance agreements in order to protect the lawful rights and interests of investors, while expanding mutual investment areas.

Notably, China’s FDI outflow to countries along the Belt and Road has increased rapidly in recent years. Such outflows rise from about US$400 million in 2004 to US$13.66 billion in 2014, growing at an average annual rate of approximately 43% in the period. This pace of growth is far higher than the average annual growth rate of 36% enjoyed by China’s overall outward FDI flows during the same period. The share received by the Belt and Road countries as part of China's total outward FDI flows also increased from about 7% in 2004 to 11.1% in 2014.

According to the figures published by the Ministry of Commerce (MOFCOM), Chinese enterprises made direct investments totalling US$12.03 billion in 48 countries along the Belt and Road between January and September 2015, up 66.2% from the same period last year. The key destinations for China’s FDI outflows were Singapore, Kazakhstan, Laos, Indonesia and Russia.

China’s implementation of the Belt and Road strategy is expected to further boost outbound investment by many mainland enterprises in the countries along the Belt and Road. China has also indicated that it will adopt a more proactive opening up strategy, giving full scope to the comparative advantages of different regions, including the Pearl River Delta (PRD), the Yangtze River Delta (YRD) and the Bohai Rim area. All such regions will be granted a greater degree of economic openness as well as enhanced economic strength in order to promote the building of the Belt and Road and comprehensively raise the level of China’s open economy. China's outbound investment, including that destined for countries along the Belt and Road, is expected to further expand in the future in line with this scenario. In line with the Vision and Actions agenda, the major investment projects in the countries along the Belt and Road are likely to focus on the following areas:

• Infrastructure construction, including facilities relating to roads, shipping, aviation, energy and communications.

• Agriculture, forestry, animal husbandry and fisheries, including the production and processing of related products.

• Oil, gas, energy and metal ores, including co-operation in exploring and developing traditional and new energy resources.

• Emerging industries, such as new-generation information technology, biotechnology and new materials.

• Co-operation in science and technology, including establishing joint laboratories and carrying out technology transfers and maritime co-operation.

Chinese enterprises are most interested in going to Hong Kong to seek their desired services.

Hong Kong is the main channel for China’s FDI outflows.

Opportunities for Hong Kong Companies

Over the years, service practitioners in Hong Kong have helped countless mainland enterprises handle their trading and investment businesses both in Hong Kong and in many overseas markets. With its inherent advantages when it comes to supporting mainland enterprises in their overseas investments, such as its free flow of capital, abundant international information resources and world-class professional services, Hong Kong is the preferred services platform for many mainland enterprises when they look to undertaking overseas ventures. Its professional services cover all aspects of such endeavours, including finance, law, tax, the risk assessment of sustainable operations, and international testing and certification.

Hong Kong is the main channel for China’s FDI outflows. In 2014, the amount of China's outward FDI carried through Hong Kong amounted to US$70.9 billion - or 57.6% of the mainland's total outward FDI flow. In terms of cumulative investment up until the end of 2014, the total amount of outward FDI from the mainland carried via Hong Kong was US$509.9 billion, accounting for 57.8% of the total cumulative investment as at end-2014.

According to surveys undertaken by HKTDC Research in the PRD, the YRD and the Bohai Rim between 2013 and 2015, most local enterprises intend to adopt the "going out" development strategy, as well as "bringing in" the advantages of foreign partners in order to develop both their domestic and overseas markets. In order to facilitate this, mainland enterprises need the support of wide-ranging professional services.

It is worth noting that more than half of the enterprises surveyed express a keen interest in using Hong Kong to find the services they need or to help identify suitable overseas partners. Indeed, some 65% of the surveyed enterprises in the PRD, 56% in the YRD and 60% in the Bohai Rim rate Hong Kong as the preferred service platform for “going out”. As the mainland accelerates its pace of “going out” and “bringing in” and advances its Belt and Road initiative, more business opportunities will inevitably become available to service practitioners in Hong Kong.

[Remarks: For more information on China’s outward FDI and the details of the HKTDC research findings, please see the HKTDC research report: Outbound Investment of Chinese Enterprises: Hong Kong the First Port of Call for Professional Services]

[1]  Source: World Investment Report 2015, UNCTAD

[2]  Hong Kong is the leading destination for the mainland’s FDI outflow, as well as the largest source of FDI for the mainland.

[3]  The 18th CPC Central Committee adopted at its Third Plenary Session on 12 November 2013 the "Decision of the CPC Central Committee on Major Issues Concerning Comprehensively Deepening Reforms".

[4]  NDRC Decree No. 20: "Decision of NDRC on Amending the Relevant Clauses of the Administrative Measures for the Approval and Record-Filing of Outbound Investment Projects and Administrative Measures for the Approval and Record-Filing of Foreign Investment Projects". (27 December 2014)