《《Chinese outward direct investment in Southeast Asia》.pdf

The Pacific Review, Vol. 17 No . 3 2004 : 323-340 I J Routledge g ^ TayiorFrancisCroup Chinese outward direct investment in Southeast Asia: how big are the flows and what does it mean for the region? Stephen Frost Abstract As recently as 2002, Southeast Asian politicians and business leaders fretted publicly about losing foreign direct investment (FDI) originally earmarked for the region to China. They are more sanguine these days. Chinese companies not only look to Southeast Asia to supply raw materials to feed Chinas industrialization; they are increasingly investing there. Analysts understandably focus on China sucking in over US$50 billion of inward FDI per year - some of which was indeed previously earmarked for Southeast Asia - but in doing so they rarely notice that the flipside of Chinese investment is the rising wave of mainland outward direct investment (ODI), particularly into neighbouring countries. This paper notes the trend by way of a preliminary investigation into two broad issues: what sort of mainland companies are moving into ASEAN and how much are they investing; and what are the potential effects of that investment? Initial data suggest that most mainland investment comes via state-owned enterprises (SOEs). And although it is impossible to know how much mainland money flows into Southeast Asia, it is certainly more than the US$2 billion for 2002 cited in official Chinese statistics. Growing (Chinese investment in ASEAN has important implications, two of which are briefly canvassed: the effect of increasing Chinese investment on sanctions regimes designed to improve human rights (with specific reference to Burma), and whether pressure can be maintained on foreign investors to comply with international labour standards in the face of Chines