Neighboring Countries Gain from China’s FDI.doc

Neighboring Countries Gain from China’s FDI SINCE 1979， when the policy of reform and opening-up came into force， Chinas economic growth has been among the most rapid in Asia. Owing to similar cultures but different natural resources， China and its neighboring countries have complemented one anothers needs during their respective phases of development. Bilateral investments and cooperation are hence mutually beneficial to China and its neighbors. These complementary economies and comparative advantages promote the circulation and optimal allocation of resources and production factors， as well as economic globalization. On a Roll with Guaranteed Polices China’s expanded participation in economic globalization has accelerated growth of its outward foreign direct investment （FDI）， which rose from US$26.51 billion in 2007 to US $87.8 bil-lion in 2012， making China one of the worlds top three investors. FDI stock has shown an annual growth of more than US $40 billion， or 20 percent， having surpassed US $100 billion in both 2011 and 2012. Chinas outward investment fields and destinations have steadily expanded. By the end of 2012， Chinas 16，000 investors had set up around 22，000 overseas companies in 179 countries and regions ? a coverage rate of 76.8 percent. As major recipients of Chinas outward investment， these neighboring countries have absorbed more than 30 percent of Chinas FDI. Since the international financial crisis， China has stepped up FDI in its neighboring countries. Taking the Association of Southeast Asian Nations（ASEAN） as an example， Chinas investment rose from US $968 million in 2007 to US $2.484 billion in 2008 ? a 156.6 percent increase. By 2012， Chinas investment in ASEAN had reached US$6.1 billion， a year-on-year growth of 3.3 percent. （See Chart 1） Chinas FDI stock in ASEAN rose from US $3.953 billion in 2007 to US$6.487 billion by the end of 2008， a 64.1 percent increase. In 2012， this figure reached US $28.24 billion， a 31.6 percen