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Investment spurt poses no threat
By Jiang Wei and Zhang Jin (China Daily)
Updated: 2004-12-04 08:48
Scholars and economists said on Friday the foreign direct investment (FDI)
surge in China will not divert the investment that flows to Latin America and
Southeast Asia.
China, Latin America and Southeast Asia are the world's three big magnets for
cross-border investments.
Latin American countries will not suffer an FDI slowdown because of Chinese
competition, said Kwok Chiu Fung, a professor at University of California.
He made the remarks at the 2004 Latin America-Caribbean and Asia-Pacific
Economics and Business Association's annual conference held yesterday in
Beijing.
The professor said that the increase of FDI in China will also buoy the
investment in its southeastern neighbours, which export raw materials and other
related products to China.
Fung conducted surveys on the FDI in China and South Asian countries between
1985 to 2002. He also compared China's statistics with those of 16 Latin
American countries from 1990 to 2002.
He said that as FDI in China rose beginning in the 1990s, investment in South
Asia saw no abating.
China's FDI mainly comes from overseas Chinese investors, and 60 per cent of
the investment comes from or via Hong Kong. However, Latin America largely lures
investment from the United States and Europe.
He said no evidence has shown that the emergence of China blocked the growth
of Latin America.
Aliacia Garcia-Herrero, an economist from Bank of Spain specializing in Latin
American economic studies, echoed Fung's comments by saying that China's ability
to attract FDI did not generally affect Latin American nations.
"This is not a one-win-one-lose game but a win-win case," Fung said.
These ideas may help calm down the so-called "China Threat," a saying that is
popular in some Latin American countries.
There has been overwhelming fear of China's emergence because some Latin
American countries share a similar economic structure with China.
Some officials and entrepreneurs of these countries are afraid that foreign
investment will flow from Latin America into China.
Instead of competing with each other, mutual investment between China and
Latin America has been surging in recent years.
About 36.5 per cent of China's outward investments in 2003 flowed into Latin
America, which amounted to US$1.04 billion.
Most of the money went into such sectors as retail, manufacturing and mining.
Chinese investment in the continent is expected to grow at a brisk pace in
the coming years.
During President Hu Jintao's Latin America visit last month, China vowed to
invest US$20 billion in Argentina in the coming 10 years.
A batch of big Chinese companies such as China Mineral and Metal Corporation,
China Ocean Shipping Company, Sinochem and Huawei Technology have shown interest
to invest or re-invest in Latin American countries such as Brazil, Chile and
Mexico.
The spending spree came as the bilateral trade became prosperous and boosts
enterprises' confidence.
The two-way trade surged by some 50 per cent year on year to top US$26.8
billion in 2003.
It also came as China and a number of Latin American nations have vowed to
facilitate investment by establishing free trade agreement (FTA) or
FTA-analogues.
Meanwhile, Latin American enterprises also eye a growing and increasingly
open China, planning to accelerate their presence in this potential
market.
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