Investment spurt in China poses no threat, says don

  • Business
  • Sunday, 05 Dec 2004

BEIJING: 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 South-East Asia.  

China, Latin America and South-East 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 the University of California.  

He made the remarks at the 2004 Latin America-Caribbean and Asia-Pacific Economics and Business Association's annual conference held on Friday here.  

The professor said the increase of FDI in China will also buoy the investment in its south-eastern 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 and 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 decline.  

China's FDI mainly comes from overseas Chinese investors, and 60% of the investment comes from or via Hong Kong. However, Latin America largely lures investment from the United States and Europe.  

Fung said there was no evidence that the emergence of China was hindering the growth of Latin America.  

Aliacia Garcia-Herrero, an economist at Bank of Spain specialising 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,” said Fung. 

These ideas may help calm down the so-called “China Threat”, a saying that is popular in some Latin American countries.  

Instead of competing with each other, mutual investment between China and Latin America has been surging in recent years.  

About 36.5% of China's overseas investments last year flowed into Latin America, which amounted for US$1.04bil (RM 4bil).  

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$20bil (RM76bil) in Argentina in the next 10 years. – China Daily/ANN  

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