COMPANIES should build factories and buy resources overseas while the yuan is rising, according to an official with Ministry of Commerce.

“While the rise of the yuan hurts exporters’ margins, it also creates lower costs for our investments overseas, so this will be a good opportunity for Chinese exporters to acquire or merge with foreign companies and expand production abroad,” said Fu Ziying, vice minister of commerce who was speaking at a trade conference yesterday in Beijing.

China is seeking to broaden channels for companies and individuals to invest abroad to ease a record trade surplus that is flooding the economy with cash and adding to the world’s largest foreign-exchange reserves.

Gains of the Chinese yuan quickened to 7 percent last year, twice as fast as the pace in 2006, official data showed.

“Chinese companies should learn from Japan and Germany, which secured larger global market share and built overseas production by expanding actively abroad when their home currencies appreciated,’’ Fu said.

China will see a surge of overseas expansion by manufacturers, mining companies and service providers over the next five to 10 years, Xing Houyuan, a researcher affiliated with the Ministry of Commerce, wrote in an article released at yesterday’s conference.

“The government should offer tax breaks and ease foreign-exchange usage for companies that want to expand abroad, and allow those companies to issue foreign-currency bonds to raise funds,” Xing said.

Nonfinancial overseas investment by Chinese companies rose by 6.3 percent to US$18.7 billion last year from the previous 12 months, Zhang Xiaoqiang, vice chairman of the National Development and Reform Commission, said at an investment conference last week.

While the yuan’s gains help lower import costs, China will boost imports of advanced technologies, key equipment, necessary energy and minerals and high-end consumer goods to help sustain domestic consumption and production, Fu said.

(SD-Agencies)