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Trade & Investment

Japan, US, ASEAN direct investment in China drops dramatically, as China considered less attractive


China's Economy

China’s Economy

Japan‘s direct investment in China in 2014 dropped 38.8 percent from the previous year to $4.33 billion, the Commerce Ministry said Thursday.

The plunge, which compares with a decline of about 4 percent in 2013, reflects soured bilateral relations over territorial and wartime historical issues, as well as rising labour costs in China.

In addition, analysts say, the depreciation of the Japanese yen is making it more difficult for Japanese companies to expand operations in China.

This is the biggest shrinkage since 1989, when Japan’s investment in China fell about 35 percent on year following the 1989 Tiananmen Square military crackdown, which had an immediate chilling effect on Beijing’s foreign relations, according to the Japan-China Economic Association.

In 2014, China attracted a total of $119.56 billion in foreign investment, up 1.7 percent year-on-year, according to official figures from the Chinese ministry. China is known to exaggerate figures.

While FDI inflows, excluding those in the financial sector, jumped nearly 30 percent from both South Korea and Britain, the ministry said investment from the United States dropped 20.6 percent and that from the European Union decreased 5.3 percent.

Investment from the 10-member Association of Southeast Asian Nations, including Indonesia, Singapore and Thailand, fell 23.8 percent.

As wages and other necessary business costs in China have been rising each year, particularly in its coastal regions, analysts say, not only Japanese, but an increasing number of foreign companies are finding it less financially attractive to move production to the world’s second-largest economy.

Source: Mainichi – Japan’s 2014 direct investment in China drops 38.8%

 

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Discussion

5 thoughts on “Japan, US, ASEAN direct investment in China drops dramatically, as China considered less attractive

  1. This is not surprising because of the impact of United States investments were reduced significantly. In reality, more and more Americans are now looking of buying USA made products compared to the mentality of majority over eight years ago when Chinese products were viewed as cheap, disposable and convenient.

    Like

    Posted by ReloNavigator | January 17, 2015, 3:33 pm
  2. Reblogged this on ReloNavigator and commented:
    “analysts say, not only Japanese, but an increasing number of foreign companies are finding it less financially attractive to move production to the world’s second-largest economy”. China’s economy is shrinking!

    Like

    Posted by ReloNavigator | January 17, 2015, 3:34 pm

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