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91. Foreign Direct Investment in China: Effects on Growth and Economic Performance

Author:
Edward M. Graham and Erika Wada
Publication Date:
04-2001
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
By almost all accounts, foreign direct investment (FDI) in China has been one of the major success stories of the past 10 years. Starting from a base of less than $19 billion in 1990, the stock of FDI in China rose to over $300 billion at the end of 1999. Ranked by the stock of inward FDI, China thus has become the leader among all developing nations and second among the APEC nations (only the United States holds a larger stock of inward FDI). China's FDI consists largely of greenfield investment, while inward FDI in the United States by contrast has been generated more by takeover of existing enterprises than by new establishment, a point developed later in this paper. The majority of FDI in China has originated from elsewhere in developing Asia (i.e., not including Japan). Hong Kong, now a largely self-governing “special autonomous region” of China itself, has been the largest source of record. The dominance of Hong Kong, however, is somewhat illusory in that much FDI nominally from Hong Kong in reality is from elsewhere. Some of what is listed as Hong Kong-source FDI in China is, in fact, investment by domestic Chinese that is “round-tripped” through Hong Kong. Other FDI in China listed as Hong Kong in origin is in reality from various western nations and Taiwan that is placed into China via Hong Kong intermediaries. Alas, no published records exist to indicate exactly how much FDI in China that is nominally from Hong Kong is in fact attributable to other nations.
Topic:
Economics, International Trade and Finance, and Political Economy
Political Geography:
United States, Japan, China, Israel, East Asia, Asia, and Hong Kong

92. The New Asian Challenge

Author:
C. Fred Bergsten
Publication Date:
03-2000
Content Type:
Working Paper
Institution:
Peterson Institute for International Economics
Abstract:
The initial postwar challenge from East Asia was economic. Japan crashed back into global markets in the 1960s, became the largest surplus and creditor country in the 1980s, and was viewed by many as the world's dominant economy by 1990. The newly industrialized countries (Korea, Taiwan, Hong Kong, Singapore) followed suit on a smaller but still substantial scale shortly thereafter. China only re-entered world commerce in the 1980s but has now become the second largest economy (in purchasing power terms), the second largest recipient of foreign direct investment inflows, and the second largest holder of monetary reserves. Indonesia and most of Southeast Asia grew at 7 percent for two or more decades. The oil crises of the 1970s and the financial crises of the late 1990s injected temporary setbacks but East Asia has clearly become a third major pole of the world economy, along with North America and Western Europe.
Topic:
Economics, International Trade and Finance, and Political Economy
Political Geography:
Japan, China, Europe, Israel, Taiwan, East Asia, Asia, North America, Korea, Singapore, and Hong Kong

93. U.S. Trade Negotiations: Lessons Learned, Lessons Applied

Author:
Mickey Kantor
Publication Date:
11-1997
Content Type:
Working Paper
Institution:
Council on Foreign Relations
Abstract:
The challenges of the era of interdependence will constitute the greatest foreign policy test of the 21st century. The war over globalization and interdependence is at an end. Only the battles are yet to be fought. Those who cower behind walls of fear and fail to accept responsibility do so at their own peril, and will not turn containment into engagement, or mutual assured destruction into mutual assured prosperity. The approach of the new millennium finds us at the intersection of three epochal events: in politics, the end of the Cold War; in economics, the emergence of a global economy; and in technology, the rise of the Information Age. The intersection of economics, strategic issues, and political concerns is creating the glue which will bind together an updated U.S. foreign policy. Vast opportunities lie before us, and more than a few pitfalls. We face fewer serious military threats but an increasing number of competitors. The rise of competition, the need to create new opportunities, and the confluence of major economic and political changes create a need to intensely focus on U.S. priorities and goals. Despite this urgency, we have yet to fully articulate a foreign policy that matches the era in which we now live, especially the appropriate role of international economics. We need to direct our focus toward the lessons we have learned over the past five years. Seekers of universal truths or simple catch phrases should prepare in advance for disappointment. U.S. leadership in both the public and private sectors must accept the challenges represented by these enormous changes. Our willingness to take responsibility, clearly define our goals, and recognize our limitations but pursue U.S. leadership at every opportunity will dictate the success or failure of promoting a stronger United States and a less dangerous world. The goals and objectives are clear: U.S. leadership must pursue peace, stability, economic progress, basic human rights, and sustainable development. In order to address these goals we need to create foreign-policy tools and institutions that are pragmatic, practical, and resilient reflecting the speed with which events, opportunities, and challenges now confront us as a nation. There is no question that global economics has fundamentally changed the nature of foreign policy. Today, economics and foreign policy are no longer separable, and economic security and national security have become synonymous. We live in an interdependent, globalized world. No longer are we self-contained, nor is it in our interest to be so. We can no longer take for granted our global economic dominance and turn our back on foreign markets. It is self-defeating in the short run and impossible in the long run to ignore the problems which occur across the border or across the world, and we cannot overlook our responsibility as the world's remaining superpower. Driven by technological change, freed of Cold War conflicts and connected by economic and strategic interests, the era of interdependence demands negotiation, engagement, and leadership. Interdependence dictates that our foreign policy and economic future are increasingly connected to international trade. Interdependence dictates that terrorism, weapons proliferation, environmental concerns, the drug trade, and economic opportunity are now cross-border issues. These issues profoundly affect the everyday lives of people around the globe. Cross-border issues directly influence policies, laws, and regulations of the countries in question, raising issues such as the rule of and respect for law, regulation and deregulation, privatization, and other concerns heretofore thought to be strictly internal. This new era requires a redefinition of global leadership. Being the only remaining superpower does not simply mean that we are the strongest military power, nor does it mean only that we are the most economically competitive nation on earth. Both of those statements are true, of course. But holding the position of the world's only remaining superpower in the era of interdependence means that we have the opportunity to take advantage of the vast economic potential which is being created around the globe to the benefit of all Americans, and we have a corresponding obligation to rally other nations to pursue common long-term interests, such as strategic and political stability, economic progress, and sustainable development. There are other examples which support the notion of new multidimensional international relations. Brazil has dramatically increased its international standing and influence using its potential economic strategic position. During the Cold War and prior to the dramatic growth of economic power and industrialization, Brazil's strategic position would have been defined and dictated by its ability or inability to have an influence over strategic and political issues especially those concerning East-West relations. But today, and in the foreseeable future, not only do countries increase their influence based on economic potential and achievement, but economic considerations and relationships tend to bring entities together which in other circumstances could not or would not cooperate. The recent Middle East Economic Conferences and the participation of China, Taiwan, and Hong Kong in the Asia-Pacific Economic Cooperation (APEC) are obvious examples.
Topic:
Foreign Policy, Cold War, Diplomacy, and Political Economy
Political Geography:
United States, China, America, Taiwan, Asia, Brazil, and Democratic Republic of the Congo