Chillin' out till it needs to be funded
Hongkong’s growing Overseas FDI Outbound from the china region has grown to an unlikely $560 bln target till 2016. It has grown from $45 bln in 2010 to a likely $80 bln in just outgoing FDI. The mercantile economy, with its own Basic Law, is much more than just another administrative region of China at least as much as Taiwan. More of course between the two islands of hope for China in a later piece on the Asian Economies. Hongkong remains an important trading center and part of US going ships shared with Singapore and a trade equation that now greatly benefits from the Yuan settled trade.
Hongkong sourced $69 bln of FDI to China in actually utilised FDI data from the government of China’s $100 bln FDI for the year. US and Europe seemed to lose their hold and interest in coming to China in numbers as US accounted for $2.8 bln and UK & Europe toghether accounted for another $ 6 bln, France and Netherlands at $700 mln each.
Taiwan may have been fighting for its democratic set up bu tist is also one of the largest exporter to China importing just $32 bln from China in 2011 till November and still exporting worth $114 bln, more than $10 bln in exports each month. Thus Taiwan’s volume of FDI may be misleading for the kind of support it gives in investments to China, China being a critical native market for its goods and services. Taiwan is an important source of investment for China and China critical market for Taiwan even as the West loses interest as a result of the crisis. November has seen a 37% rise in no. of Taiwanese projects even as ytear on year FDI utilisation is down 10-15%
Macao has been slowly and surely growing as a source and destination for Chinese FDI esp with new focus on gaming and property. Even otherwise Macao enterprises brought in more than $ 200 mln to China in November and China exporting goods worth $ 2 bln to Macao. Macao as a destination for Chinese enterprises however preclude more review of Wacao at this point as Chinese enterprises reached a turnover of $12 bln in the 11 months of 2011 ( MOFCOM)
FDI in China may have effectively plateaued but is more than $ 100 bln for the second successive year, and the newness in it is the accetability and even desirability of FDI from neighbours in Asia. Asia accounted for $90 bln of the FDI flows in the first 11 months, even Indonesia, Philipines and Malaysia enterprises that do not share a border with China flying in dollars as Singapore, Taiwan and Japan putting in $ 6 bln each and Korea starting slow but at $2.2 bln(MOFCOM)
Growth costs of Labor , availability of power and overconcentration of growth in the first few cities is also changing the equation for investment in China. The Oil and Gas pipelines with the Central Asia republics and a new Shanghai Development Council for Central Asia in Russia’s leadership is defining trade with Uzbekistan, Turkmenistan, Kazakhstan, Kyrgystan and Tajikistan esp in the bordering province of Xinjiang as labor migration to the East coast slows down even as some ethnic tensions build up with the Uighurs and the Hans taking prominence. Hans have predominantly come to this autonomous region as migrants in search of work taking their population from 5% to 40%(CFR)
In June 2008, the BBC produced a photo report called Life in Urumqi, which said Xinjiang’s capital had recently witnessed “the arrival of shopping centres, tower blocks, department stores and highways.”
More details on China’s outward FDI to Central Asia as it developes legs for a Yuan strategy are also planned for this web.
With China’s manufacturing sector in decline, there is a natural move to the growing Services business for International businesses. FIEs’ Services trade with China has grown to $128 bln from $28 bln in 1997 for statistics available till 2009. Initial imports to China included only Travel and Transport services in 1997 and in 2009 it had added $ 42 bln in Consulting alone apart from growing travel and Transport. In the next two years growth would have likely come from Advertising and Construction services as also Computer and information services all of which were under $10 bln in 2009
These figures for trade, do not directly reflect real FDI but China’s policies encourage FDI than just trading and would indicate possible momentum in these categories for those considering FDI