Chinese investment in Vietnam is accelerating
VOV.VN - China’s domestic economy is widely reported to be slowing down relative to its impressive growth over the past decade— however, leading economists report foreign investment by their businesses is at record high levels.
The leading economists say the Chinese investors are looking for higher and safer returns outside of their home country as a way to build their brands and global competitiveness.
Now government officials in Vietnam report their foreign investment statistics are showing that Chinese businesses are increasingly turning their gaze towards their southern neighbour.
At a recent conference in Hanoi sponsored by the Foreign Investment Association of Vietnam speakers said Chinese investment in the first two months of 2016 has taken a sharp upturn and they questioned the impact.
The speakers said it is estimated that since 2005 the total outward investment by Chinese businesses in all countries around the globe has been US1.1 trillion, with nearly three quarters of it in energy, natural resources, and related transportation infrastructure.
A relatively small portion of their investment is in the US because the federal Committee on Foreign Investment in the US screens out such type of investments by foreign countries, considering it a threat to national security.
 |
Speakers questioned whether Vietnam should follow the US lead and forbid Chinese investment in national resources as well as state owned enterprises, on the basis that they are vital to the national security interest of the country.
Professor Nguyen Mai, Chairman of the Association, said Chinese businesses first began investing in Vietnam in late November 1991 and has since steadily grown over the years.
“Most of it has been in the cities and industrial zones in the border provinces between the two nations,” said Mr Mai.“Specifically, the provinces of Lao Cai, Lang Son, Cao Bang, Ha Giang and Lai Chau, have drawn the majority of investment from China.”
Investments in the referenced provinces have been highly concentrated in natural resources said Mr Mai, such as a titan iron ore processing plant in Thai Nguyen and an antimony plant in Ha Giang.
They have also have invested heavily in rubber and wood product manufacturing plants as well as a cigarette factory in Lao Cai, along with fossil fuel and coal production facilities in Cao Bang.
“China’s investment has been beneficial in helping local people lift themselves out of poverty and improve their standard of living,” said economic expert Bui Trinh.
By and large Chinese businesses haven’t invested in the agriculture, forestry or seafood industries, Mr Trinh said, but have focused on tapping the hard commodities or natural resource of the nation.
“Admittedly, Vietnam faces a risk of Chinese businesses exhausting the nation’s natural resources,” he said.
Now, with investment returns on hard commodities low, Chinese businesses have shifted their focus onto industries with higher rates of return such as entertainment, real estate, insurance, and technology.
As a result of some investment failures, Chinese state owned enterprises have been counselled by the government to take less than majority interests in their investments, so they can learn local marketplaces and reduce their exposure to risk.
Bui Kien Thanh agreed that limits should be placed on Chinese investment, particularly with respect to natural resources. “If we don’t place limits, the nation’s natural resources will be exhausted and we won’t have much to show for it,” said Mr Thanh.
All the economic trends and China’s rapidly growing private sector have set the table for higher levels of investment in Vietnam, and there needs to be a bilateral investment deal to place reasonable limits on China’s involvement in Vietnam.
