Green Infrastructure Finance
6. Investment Trends and Challenges
C
hina’s sovereign credit rating is one of the highest in the region and among developing economies. In December 2010, S&P affirmed its “AA-” long-term foreign current rating on China, citing the country’s “exceptional growth prospects” and its “modest government indebtedness” as the key factors supporting its creditworthiness and stable outlook.
Table 8: S&P’s Credit Rating Country China Indonesia Philippines Singapore Korea, Rep. of Vietnam
Rating AABB+ BB+ AAA A+ BB-
The rating agency had also noted that “the stable rating outSource: Standard & Poor’s, 2012.18 look reflects that China can absorb potential balance sheet losses with little damage to its credit standing, given its substantial foreign exchange reserves and strong fiscal position”.55 Since 2009, China has been continuously ranked among the top quintile of countries on the Global Competitive Index. It was ranked between 26th and 29th in the period 2009-2013.56 Two salient factors have contributed to the country’s strong competitiveness: (i) its market size (ranked 2nd in 2011); and (ii) its favorable macroeconomic environment (ranked 10th in 2011) characterized by high national savings rate (ranked 5th) and high sovereign credit rating (ranked 22nd).
Figure 5: Global Competitiveness Index Stage of development Transition 1-2
1 Factor driven
2 Efficiency driven
Transition 2-3
3 Innovation driven
Institutions 7 Innovation Business sophistication
6 5 4
Infrastructure Macroeconomic environments
3 2 Market size
1
Health and primary education
In terms of public-private investments (PPIs), Higher education Technological China led the region in absolute investment and training readiness that it attracted over the period 2003-2011. Goods market Financial market However, on a percentage of GDP basis, China’s efficiency development Low market efficiency result is less impressive with the lowest value among the countries in this study. This is likely China Efficiency-driven economies due to many implicit and explicit investment Source: World Economic Forum, 2012.56 restrictions that have been put in place relating to private, especially, foreign participation in the country’s public sectors. For example, the telecom sector had been a PPI “blind spot” due to its classification as “prohibited” (until December 2011) in the Government’s “Catalogue for the Guidance of Foreign Investment in Industries”.x Moreover, according to the “Guiding Opinions Concerning the Advancement of Adjustments of State Capital x The Catalogue delineates sectors of the economy where foreign investment is encouraged, restricted and prohibited. Sectors not listed in the Catalogue are considered permitted.
18
The World Bank – AusAID