Southeast Asia benefits as Chinese investors shun US

Southeast Asia benefits as Chinese investors shun US

13/06/19

Luke Foddy, Communications Manager

Chinese companies have sharply accelerated investment in Southeast Asia in a bid to avoid American tariffs, with FDI into Vietnam up six-fold on the year.

According to the Nikkei Asian Review, Chinese investment in Vietnam reached US$1.56 billion between the start of 2019 and 20 May. The January-April figure alone surpassed the 2018 total, indicating the scale of the increase.

Vietnam has often been touted as among the chief beneficiaries of the US-China trade war, usually in the context of companies relocating manufacturing operations away from China to avoid tariffs and US ire.

However, the investment figures show that Vietnam is attracting considerable interest from Chinese firms, which are increasingly abandoning the US in light of the trade war.

Investment by Chinese companies in the United States has fallen by nearly 90 per cent since its peak in 2016, including a sharp drop in 2018 and early 2019, the South China Morning Post reports.

Chinese firms operating in the US have reported lower revenues and thinner profit margins than a year ago.

Speaking at the UK-Asia Tech Powerhouse, organised by ABP Royal Albert Dock and Asia House on Tuesday, the Financial Times’ James Kynge emphasised the dramatic nature of these investment shifts, saying there’s been “a ten-fold increase in money flowing into Southeast Asia.”

He cited Singapore and Indonesia as particular beneficiaries of the trend, but said Vietnam was the “one to watch.”