China becomes major Japanese investment site
China becomes major Japanese investment site
TOKYO (AFP): China overtook Britain, the Netherlands and
Australia last year to become the biggest destination for
Japanese direct investment after the United States, according to
the latest finance ministry data.
The figures also show that increased investment in Asian
countries such as Indonesia, the Philippines and Singapore along
with China helped the region surpass Europe as main recipient of
Japanese investment after North America.
The ministry said last month that direct investment in Asia
jumped to a record US$9.7 billion in the year to March, up 46
percent from a year earlier. Investment in North America grew 16
percent to $17.8 billion but investment in Europe dropped 22
percent to $6.23 billion.
A further breakdown of the data released this week showed that
Japanese investment in China alone soared 52 percent to a record
$2.57 billion in the same period, accounting for 6.2 percent of
global investment.
China's share was second only to the United States where
Japanese investment advanced 18 percent to $17.3 billion, some 43
percent of the total.
The latest surge in direct investment in China comes only a
year after the country displaced Indonesia as the most popular
destination for Japanese companies investing in Asia.
Japanese analysts say the increase reflects the emergence of
China as a market for finished goods and not just simply a low-
cost production base for exporting cheaply-assembled products to
other countries.
Among the three countries more popular than China as an
investment destination during the previous year, Britain saw
inflows from Japanese companies fall to $2.17 billion, down 14
percent.
Japanese investment also plunged 52 percent to $1.05 billion
in the Netherlands and 34 percent to $1.27 billion in Australia.
But these three countries are still among the five biggest
recipients of cumulative Japanese investment since 1951. After
the United States with 42 percent, Britain is second with 7.3
percent, Australia third with 5.2 percent, Panama fourth with 4.7
percent and the Netherlands fifth with 4.2 percent.
China's share of the cumulative total over the past
four-and-a-half decades is still only 1.9 percent, dwarfed by
other Asian economies such as Indonesia with 3.7 percent, Hong
Kong with three percent and Singapore with 2. 1 percent.
Indonesia
Among other Asian countries helping to boost the region's
share of Japanese investment in the latest year was Indonesia,
where investment rebounded to $1.76 billion, more than double the
previous year's level.
Japanese investment meanwhile soared more than threefold to
$668 million in the Philippines, where it has been long
restrained by political turmoil and inadequate power supplies.
Investment also jumped 64 percent to $1.05 billion in
Singapore, 24 percent to $719 million in Thailand, 63 percent to
$400 million in South Korea and almost fourfold to $176 million
in Vietnam.
But direct investment dropped eight percent to $1.13 billion
in Hong Kong and was also down seven percent at $742 million in
Malaysia. Investment in Taiwan dropped five percent to $278
million.
In Europe, the decline in Japanese investment was widespread
except for Belgium, which saw a sharp increase reflecting
Japanese carmakers setting up regional distribution centers along
with research and development subsidiaries.
Japanese investment in Latin America came to $5.2 billion, up
55 percent and including sharply higher investment in Brazil and
Mexico. Investment in Africa dropped 36 percent to $346 million
but investment in the Middle East rose 34 percent to $290
million.
The finance ministry defines direct invest abroad as including
investment by Japanese companies in overseas branches,
subsidiaries and affiliates in which they own at least 10 percent
of the equity. Direct investment also includes real estate for
business but not pleasure.