IS CHINA LEARNING FROM ITS NEIGHBORS? A COMPARISON OF OVERSEAS INVESTMENT BETWEEN CHINA AND OTHER EAST ASIAN ECONOMIES

Key words: 
• China /
• overseas investment /
• East Asian economies

Abstract: Twenty years'economic reform and open door practice have made China not only an important host nation to foreign direct investment (FDI), but also the largest FDI home nation among the developing countries. In fact, since the late 1980s, the Chinese government has not simply put its effort into exporting "made-in-China" products to earn foreign currency or into encouraging foreign inward capital, but also actively encouraged its manufacturers to invest overseas. This paper examines China's outward FDI and poses the question to what degree China is expected to follow the other East Asian economies or will it forge its own particular patterns. The first section of this paper reviews the characteristics of FDI of China's neighbors and then it turns to examine the spatial patterns of and motivations for China's FDI. Finally, this paper looks at potential of China's outward investment in the near future. It concludes that China is not Japan but its potential for further outward FDI is huge. With its WTO membership and growing economy, China will become the second to Japan or USA. It will also use its financial power to further contain Taiwan's independence.