（DCS系統）和（機器人系統）及（大型伺服控制系統）備件大賣！叫賣！特賣！賣賣賣！
Currently, China's potential financial risks derive not only from the rapid accumulation of domestic debts over the past few years, but also from the build-up of financial risks in overseas assets. While China's offshore assets are unlikely to reach a size comparable to that of domestic assets in the foreseeable future, risks in overseas assets may still pose a threat to the overall stability of the domestic market.
With financial globalization having increased massively since the 1990s, there is a danger of financial crises now spreading much more quickly across the world.
A crisis that occurs in a small country could spread rapidly like a virus to other countries and regions. In this sense, China should pay close attention to the accumulation of cross-border financial risk.
At the macro level, potential cross-border financial risk mainly comes from China's massive overseas investment. Overly optimistic expectations held by destination countries, domestic investors and lenders, unrealistic and aggressive investment plans as well as other factors all contribute to the accumulation of potential risk. At a certain point, a minor disruption may completely reverse market participants' expectations, breaking the economic equilibrium in the destination countries. This may lead to consequences like currency devaluation, capital flight and a collapse in asset prices, thus triggering a chain reaction that spreads the risk to other countries.
By the end of 2016, China's outbound direct investment assets had reached $1.32 trillion, of which $1.06 trillion was in the form of equity assets. Since the beginning of the 21st century, and especially after the US subprime mortgage crisis, Chinese investment has been widely welcomed in many countries. While that's a good trend, we should not underestimate the fanaticism for investment and economic development programs in some trading partner countries.
Some countries drafted large-scale economic development plans, expecting Chinese investment to be the major source of the funding. And some countries added a lot of projects that were mainly in their own interests during the formulation of economic and trade cooperation plans with China, regardless of the mutual benefit principle for cooperation. Some countries are seriously short of funding for economic development due to huge military expenditure, so they expressed hopes for Chinese investment but failed to think about what economic resources they have.
Obviously, if China cannot give full play to its economic planning and other professional skills, and simply compromises with the requirements of host countries under the name of "friendship" and "strategy," projects are doomed to fall into crisis in such countries.
Moreover, potential financial risks may lie in the priority fields of China's outbound investment. "If you want to get rich, build roads first," as the saying goes. China wants to share with more trading partners its successful experience of how roads and railways facilitated its economic development, which is why infrastructure investment has become China's top priority in promoting economic cooperation in the international community.
But in order to accomplish successful cross-border infrastructure investment, China must recognize and prevent potential financial risk that may come from huge investment, long payback periods and inability to generate direct foreign exchange income. If these infrastructure projects are operated by the host countries' governments or companies and Chinese companies are only responsible for the planning, design and construction, we only need to pay attention to the macroeconomic stability, government fiscal management and balance of payments of the host countries. If the projects are carried out by Chinese companies through build-operate-transfer models, the capital-intensive characteristics will motivate investors to raise the debt ratio so as to improve returns on equity, and then how to manage liability becomes a critical issue.
At the same time, many host countries impose different degrees of price controls on infrastructure services like electricity, water, railways and highways. How to ensure relevant authorities set prices that are not too low to generate profits for Chinese investors is also crucial for determining whether the project will make or lose money. After all, projects that have resulted in losses are not rare in global investment history and Chinese investors have already encountered similar problems in their overseas infrastructure investment practices.
In addition, as foreign investors, Chinese companies in host countries may face difficulties in repatriating profits in convertible currencies, such as the yuan, the US dollar, the euro or the Japanese yen, because many such infrastructure projects serve domestic markets and cannot generate direct foreign exchange revenue.
Also, considering the foreign exchange shortage in most developing countries, there is a high degree of uncertainty about whether Chinese companies can remit their infrastructure profits as scheduled from host countries.
The author is a research fellow with the Chinese Academy of International Trade and Economic Cooperation. bizopinion@globaltimes.com.cn
