fis.htm

The Giant Sucking Sound: Is China Diverting
Foreign Direct Investment
from East Asia and Latin America?

In recent years, China has become a favorite destination for foreign direct investment (FDI). In 2002, foreign direct investment in China reached US$53 billion. For 2003, despite the problems associated with SARS (Severe Acute Respiratory Syndrome), China received US$54 billion worth of foreign direct investment (UNCTAD 2004). China has become one of the top recipients of FDI in the world.

China is on its way to become "the factory of the world". The success of China in attracting foreign direct investment is no accident. One of the earliest strategic policy reforms of China was to open up the South to lure foreign investors. China's attempts to introduce markets into its economy go hand in hand with the liberalization of its FDI regime. In some ways, foreign direct investment reforms can be seen as the vanguard of domestic market reforms.

One of the most important elements of China's economic reform has been the promotion of foreign direct investment inflow. FDI in China has grown dramatically over the past two decades, since China initiated its "open-door" policy in 1978 (Table 1). When China first initiated its "open-door" policy, there was very little FDI inflow. It was not until the mid-1980s when FDI in China surged. In the early 1990s, it once again gained momentum. After it achieved an unprecedented growth between 1991 and 1993 however, both the number of projects and the contracted value began to go down in 1994. This downturn continued until the next big wave of FDI inflow hit China in 2000. In 2002, despite the widespread decline in FDI in the world, China experienced an increase in FDI inflow and overtook the United States to become the world's second largest destination of FDI.
　

	Contracted		Realized
Year	Amount	Growth Rate	Amount	Growth Rate
	(US$ million)	(%)	(US$ million)	(%)
1979-1982	6,010		1,166
1983	1,732		636
1984	2,651	53.1	1,258	97.8
1985	5,932	123.8	1,661	32.0
1986	2,834	-52.2	1,874	12.8
1987	3,709	30.9	2,314	23.5
1988	5,297	42.8	3,194	38.0
1989	5,600	5.7	3,392	6.2
1990	6,596	17.8	3,487	2.8
1991	11,977	81.6	4,366	25.2
1992	58,124	385.3	11,007	152.1
1993	111,436	91.7	27,515	150.0
1994	82,680	-25.8	33,767	22.7
1995	91,282	10.4	37,521	11.1
1996	73,277	-19.7	41,725	11.2
1997	51,004	-30.4	45,257	8.5
1998	52,102	2.2	45,463	0.5
1999	41,223	-20.9	40,319	-11.3
2000	62,380	51.3	40,715	1.0
2001	69,195	10.9	46,878	15.1
2002	82,768	19.6	52,743	12.5
1979-2002	827,809		446,258

Source: China Foreign Economic Statistical Yearbook.

Tables 2a and 2b present the contracted value and the realized value of FDI from 15 leading investing territories, respectively. One of the features of the inflow of FDI in China is the large contribution of investment from Hong Kong, Taiwan and Macau, especially during the late 1980s and the early 1990s. One of China's reform strategies is to first open up Special Economic Zones (SEZs) in the southeast part of China in an attempt to attract foreign capital from its neighbors. Four SEZs were established in two southeast coastal provinces, Guangdong and Fujian. In Guangdong province, three SEZs are established in Shenzhen, Zhuhai, and Shantou. Shenzhen was a small town sharing a border with the then British colony, Hong Kong. Zhuhai is located next to Macao. Shantou is another coastal town lies near the border between Guangdong and Fujian. The fourth SEZ, Xiamen in Fujian province was a relatively industrialized city, located near Taiwan.

Country (Territory) (US$ million)	1983-1991	1992	1993	1994	1995	1996	1997	1998	1999	2000	2001	2002	1992-2002	1983-2002
Total	50,667	58,735	111,436	82,680	91,282	73,276	51,004	52,102	41,223	62,380	69,195	82,768	776,080	826,747
Hong Kong, China	31,077	41,994	73,939	46,971	40,996	28,002	18,222	17,613	13,329	16,961	20,686	25,202	343,914	374,992
United States	4,649	3,142	6,813	6,010	7,471	6,916	4,937	6,484	6,016	8,001	7,515	8,156	71,460	76,109
Taiwan	0	5,548	9,965	5,395	5,879	5,141	2,814	2,982	3,374	4,042	6,914	6,741	58,795	58,795
Japan	3,688	2,200	2,960	4,440	7,592	5,131	3,401	2,749	2,591	3,681	5,420	5,298	45,464	49,152
Singapore	922	1,003	2,954	3,778	8,666	6,314	469	3,002	2,258	2,031	1,984	2,785	35,244	36,166
Virgin Islands	6	43	299	836	1,321	3,121	5,156	6,136	3,487	7,522	8,772	12,650	49,342	49,348
Korea	0	421	1,557	1,806	2,998	4,236	2,181	1,641	1,484	2,386	3,487	5,282	27,479	27,479
United Kingdom	785	287	1,988	2,748	3,577	2,542	1,446	1,682	1,085	834	1,516	1,142	18,848	19,633
Germany	1,168	134	249	1,233	1,660	998	613	2,375	939	2,900	1,171	915	13,188	14,355
France	245	292	236	248	642	1,235	1,081	489	470	634	566	879	6,773	7,018
Macau, China	0	0	2,815	1,721	1,115	449	359	307	427	348	503	632	8,675	8,675
Netherland	220	41	152	366	602	889	567	563	676	3,414	974	516	8,761	8,981
Canada	334	316	1,184	890	982	823	907	947	699	868	1,295	1,148	10,060	10,394
Malaysia	62	209	759	617	1,061	757	490	326	266	389	472	793	6,139	6,200
Australia	340	276	638	849	1,257	522	614	699	588	697	675	910	7,726	8,065
Share in total (%)	1983-1991	1992	1993	1994	1995	1996	1997	1998	1999	2000	2001	2002	1992-2002	1983-2002
Total	100.0	100.0	100.0	100.0	100.0	100.0	100.0	100.0	100.0	100.0	100.0	100.0	100.0	100.0
Hong Kong, China	61.3	71.5	66.4	56.8	44.9	38.2	35.7	33.8	32.3	27.2	29.9	30.4	44.3	45.4
United States	9.2	5.3	6.1	7.3	8.2	9.4	9.7	12.4	14.6	12.8	10.9	9.9	9.2	9.2
Taiwan	0.0	9.4	8.9	6.5	6.4	7.0	5.5	5.7	8.2	6.5	10.0	8.1	7.6	7.1
Japan	7.3	3.7	2.7	5.4	8.3	7.0	6.7	5.3	6.3	5.9	7.8	6.4	5.9	5.9
Singapore	1.8	1.7	2.7	4.6	9.5	8.6	0.9	5.8	5.5	3.3	2.9	3.4	4.5	4.4
Virgin Islands	0.0	0.1	0.3	1.0	1.4	4.3	10.1	11.8	8.5	12.1	12.7	15.3	6.4	6.0
Korea	0.0	0.7	1.4	2.2	3.3	5.8	4.3	3.1	3.6	3.8	5.0	6.4	3.5	3.3
United Kingdom	1.5	0.5	1.8	3.3	3.9	3.5	2.8	3.2	2.6	1.3	2.2	1.4	2.4	2.4
Germany	2.3	0.2	0.2	1.5	1.8	1.4	1.2	4.6	2.3	4.6	1.7	1.1	1.7	1.7
France	0.5	0.5	0.2	0.3	0.7	1.7	2.1	0.9	1.1	1.0	0.8	1.1	0.9	0.8
Macau, China	0.0	0.0	2.5	2.1	1.2	0.6	0.7	0.6	1.0	0.6	0.7	0.8	1.1	1.0
Netherland	0.4	0.1	0.1	0.4	0.7	1.2	1.1	1.1	1.6	5.5	1.4	0.6	1.1	1.1
Canada	0.7	0.5	1.1	1.1	1.1	1.1	1.8	1.8	1.7	1.4	1.9	1.4	1.3	1.3
Malaysia	0.1	0.4	0.7	0.7	1.2	1.0	1.0	0.6	0.6	0.6	0.7	1.0	0.8	0.7
Australia	0.7	0.5	0.6	1.0	1.4	0.7	1.2	1.3	1.4	1.1	1.0	1.1	1.0	1.0
Above 15	85.8	95.2	95.6	94.2	94.0	91.5	84.8	92.1	91.4	87.7	89.5	88.3	91.7	91.4

Source: China Statistical Yearbook, China Foreign Economic Statistical Yearbook, Almanac of China External Economies and Trade, various issues
Note: Data for 1983 - 1992 include data of Foreign Direct Investment and Other Foreign Investment.

Country (Territory) (US$ million)	1983-1991	1992	1993	1994	1995	1996	1997	1998	1999	2000	2001	2002	1992-2002	1983-2002
Total	23,290	11,008	27,515	33,767	37,521	41,745	45,277	45,463	40,319	40,715	46,878	52,743	422,949	446,239
Hong Kong, China	13,676	7,507	17,275	19,665	20,060	20,677	20,632	18,508	16,363	15,500	16,717	17,861	190,767	204,442
United States	2,585	511	2,063	2,491	3,083	3,443	3,239	3,898	4,216	4,384	4,433	5,424	37,186	39,771
Taiwan	0	1,051	3,139	3,391	3,162	3,475	3,289	2,915	2,599	2,297	2,980	3,971	32,267	32,267
Japan	3,116	710	1,324	2,075	3,108	3,679	4,326	3,400	2,973	2,916	4,348	4,190	33,051	36,167
Singapore	270	122	490	1,180	1,851	2,244	2,606	3,404	2,642	2,172	2,144	2,337	21,193	21,463
Virgin Islands	0	0	0	0	304	538	1,717	4,031	2,659	3,833	5,042	6,117	24,241	24,241
Korea	0	119	374	723	1,043	1,358	2,142	1,803	1,275	1,490	2,152	2,721	15,199	15,199
United Kingdom	331	38	221	689	914	1,301	1,858	1,175	1,044	1,164	1,052	896	10,351	10,682
Germany	400	89	56	259	386	518	993	737	1,373	1,041	1,213	928	7,593	7,994
France	206	45	141	192	287	424	475	715	884	853	532	576	5,124	5,330
Macau, China	0	202	587	509	440	580	395	422	309	347	321	468	4,580	4,580
Netherland	64	28	84	111	114	125	414	719	542	789	776	572	4,274	4,338
Canada	68	58	137	216	257	338	344	317	314	280	441	588	3,290	3,358
Malaysia	6	25	91	201	259	460	382	340	238	203	263	368	2,830	2,835
Australia	192	35	110	188	233	194	314	272	263	309	336	381	2,634	2,827
Share in total (%)	1983-1991	1992	1993	1994	1995	1996	1997	1998	1999	2000	2001	2002	1992-2002	1983-2002
Total	100.0	100.0	100.0	100.0	100.0	100.0	100.0	100.0	100.0	100.0	100.0	100.0	100.0	100.0
Hong Kong, China	58.7	68.2	62.8	58.2	53.5	49.5	45.6	40.7	40.6	38.1	35.7	33.9	45.1	45.8
United States	11.1	4.6	7.5	7.4	8.2	8.2	7.2	8.6	10.5	10.8	9.5	10.3	8.8	8.9
Taiwan	0.0	9.5	11.4	10.0	8.4	8.3	7.3	6.4	6.4	5.6	6.4	7.5	7.6	7.2
Japan	13.4	6.4	4.8	6.1	8.3	8.8	9.6	7.5	7.4	7.2	9.3	7.9	7.8	8.1
Singapore	1.2	1.1	1.8	3.5	4.9	5.4	5.8	7.5	6.6	5.3	4.6	4.4	5.0	4.8
Virgin Islands	0.0	0.0	0.0	0.0	0.8	1.3	3.8	8.9	6.6	9.4	10.8	11.6	5.7	5.4
Korea	0.0	1.1	1.4	2.1	2.8	3.3	4.7	4.0	3.2	3.7	4.6	5.2	3.6	3.4
United Kingdom	1.4	0.3	0.8	2.0	2.4	3.1	4.1	2.6	2.6	2.9	2.2	1.7	2.4	2.4
Germany	1.7	0.8	0.2	0.8	1.0	1.2	2.2	1.6	3.4	2.6	2.6	1.8	1.8	1.8
France	0.9	0.4	0.5	0.6	0.8	1.0	1.0	1.6	2.2	2.1	1.1	1.1	1.2	1.2
Macau, China	0.0	1.8	2.1	1.5	1.2	1.4	0.9	0.9	0.8	0.9	0.7	0.9	1.1	1.0
Netherland	0.3	0.3	0.3	0.3	0.3	0.3	0.9	1.6	1.3	1.9	1.7	1.1	1.0	1.0
Canada	0.3	0.5	0.5	0.6	0.7	0.8	0.8	0.7	0.8	0.7	0.9	1.1	0.8	0.8
Malaysia	0.0	0.2	0.3	0.6	0.7	1.1	0.8	0.7	0.6	0.5	0.6	0.7	0.7	0.6
Australia	0.8	0.3	0.4	0.6	0.6	0.5	0.7	0.6	0.7	0.8	0.7	0.7	0.6	0.6
Above 15	89.8	95.8	94.8	94.4	94.6	94.3	95.2	93.8	93.5	92.3	91.2	89.9	93.3	93.1

Source: China Statistical Yearbook, China Foreign Economic Statistical Yearbook, Almanac of China External Economies and Trade, various issues.
Note: Data for 1983 - 1986 include data of Foreign Direct Investment and Other Foreign Investment.

Hong Kong has by far been the biggest investor in China throughout the years. The investment from Hong Kong to China has increased dramatically since the early 1980s. Between 1983 and 2002, the contracted amount and the realized amount of FDI from Hong Kong amount to more than US$375 billion and US$204 billion respectively. These figures account for 45.4% and 45.8% of the total respective contracted amount and realized amount of FDI from the world. However, it has been frequently estimated that a significant portion of investment from Hong Kong to China originates from China itself or from countries outside Hong Kong. A large amount of China's capital outflow is channeled to Chinese firms located in Hong Kong and finds its way back to China as FDI. This type of "round tripping" of funds is mostly used to escape regulations such as barriers to trade or to gain eligibility to incentives available to only foreign investors (e.g. tax concessions). According to the World Bank (2002), round tripping accounts for twenty to thirty percent of FDI in China.

Between 1983 and 2002, Singapore and Macao ranked 6th and 12th in total contracted FDI in China, and they ranked 6th and 11th respectively in total realized FDI. The presence of both economies appears to have been stronger in the beginning of the 1990's.

While several East and Southeast Asian economies are among the top investors in China, none of the Latin American economies is among the top fifteen foreign investors in China. In the last few years, prices of commodities and raw materials such as copper, aluminum, cement, steel, petroleum and soybeans have soared partly due to the breakneck pace of China's industrialization. This seems to have benefited countries such as Brazil, Argentina and Venezuela as China became one of their largest export markets. But overall, the economic relationship between China and Latin America, in contrast to that between China and East and Southeast Asia is still at a very low stage. Another difference between the Asian and Latin American economies is that there is increasing evidence that a vertical production and business network is thriving among the Asian economies (including China) but not among the Latin American economies.¹

While increases in FDI from the outside world are complementary to China's efforts to modernize its economy, many developing countries in the world seem to be very worried about the prospects of a rising China that absorbs more and more of the investment from major multinationals. Several governments in Asia and Latin America have publicly noted that the emergence of China has diverted direct investment away from their economies. Policymakers and analysts in the developing world are convinced that the rise of China has contributed to the "hollowing out" phenomenon, with foreign and domestic investors leaving their countries and investing in China instead. This in turn has led to continued loss of manufacturing industries and jobs, further weakening the vitality of these economies. Popular press has reported that in 2002, Mexico lost more than 200,000 jobs in the maquiladora assembly industry along the U.S.-Mexico border, as more than 300 companies have moved to China (Miami Herald 2003).

In this newsletter, we would like to examine the question of whether the successful FDI policy of China has diverted foreign direct investment away from a group of Asian and Latin American economies. Theoretically, a growing China can add to other countries' direct investments by creating more opportunities for production-networking and raising the need for raw materials and resources. At the same time, the extremely low Chinese labor costs may lure multinationals away from other Asian and Latin American sites when the foreign corporations consider alternative locations for low-cost export platforms. The net effect on FDI inflows to other economies cannot be determined without econometric studies.

There is a growing number of studies on the potential Chinese FDI diversion. In a series of papers, Chantasasawat, Fung, Iizaka and Siu (2003, 2004a, 2004b and 2004c), Eichengreen and Tong (2005) and Zhou and Lall (2005) provided econometric evidence concerning the impact of the rise of China on the FDI inflows to East Asian and Latin America.² The literature so far paints a consistent picture and come to similar conclusions with respect to East Asia and Latin America. For this newsletter, we draw mainly from the research work of Chantasasawat, Fung, Iizaka and Siu (2003, 2004a, 2004b, 2004c).

In Asia, the economies we considered include Hong Kong, Taiwan, Republic of Korea, Singapore, Malaysia, Indonesia, Philippines and Thailand. In Latin America, the economies we studied include Argentina, Bolivia, Brazil, Chile, Columbia, Costa Rica, Ecuador, El Salvador, Guatemala, Mexico, Nicaragua, Panama, Paraguay, Peru, Uruguay and Venezuela.

The research strategy in these papers is to control for the standard determinants of foreign direct investment and then add a proxy to represent "the China Effect". The researchers then investigate the sign, significance and magnitude of such a "China Effect".

It is not hard to find various analysts, commentators and policymakers in Asia and in Latin America who have voiced concerns about the emergence of China and that China is adversely affecting direct investment flows into their economies. In November 2002, Singaporean Deputy Prime Minister Lee Hsien Loong (who has since become the Prime Minister of Singapore) commented that "Southeast Asian countries are under intense competitive pressure, as their former activities, especially labor-intensive manufacturing, migrate to China. One indicator of this massive shift is the fact that Southeast Asia used to attract twice as much foreign direct investment as Northeast Asia, but the ratio is reversed." (ChinaOnline November 14, 2002). According to KOTRA, the state-run trade and investment promotion agency of the Republic of Korea, the rate of foreign direct investment in most Asian countries is falling as global investors are being drawn to invest in China (Republic of Korea Times August 27, 2002). World Economic Forum director for Asia, Frank J. Richter, said if the Asian countries do not take prudent and pragmatic steps to be as competitive as China, the foreign direct investment flows into these economies would be adversely affected (New Straits Times-Management Times March 9, 2002). Furthermore, Taiwan's Vice Premier Lin Hsin-I said that facing the rapid rise of the Mainland Chinese economy, Taiwan would have to take effective measures to increase its competitiveness. Taiwan has to implement the "go south" policy to encourage Taiwan to switch their investments from the Mainland to Southeast Asian countries (Taiwanese Central News Agency November 21, 2002).

In Latin America, Cesar Gavina, head of the 34-country Organization of American States, was quoted to have said, "The fear of China is floating in the atmosphere here. It has become a challenge to the Americas not only because of cheap labor, but also on the skilled labor, technological and foreign investment front." Panama's Vice Minister of Foreign Affairs, Nivia Rossana Casrellen, said, "The FTAA is moving ahead because of a collective will to speed up development and a collective fear of China" (Miami Herald November 21, 2003). According to Businessweek's Mexico City Bureau Chief, Geri Smith, "China has siphoned precious investment and jobs from Mexico..." (Businessweek November 8, 2004).

5. Empirical Results: Is China Diverting FDI from East Asian and Latin American Economies?

Is China's FDI policy a friend or an enemy to other developing economies in Asia and in Latin America? As mentioned earlier, theoretically, the emergence of China can have both investment-creating effects as well as investment-diverting effects. For our own research, we use data for eight Asian economies (Hong Kong, Taiwan, Republic of Korea, Singapore, Malaysia, Philippines, Indonesia and Thailand) and data from sixteen Latin American economies (Argentina, Bolivia, Brazil, Chile, Columbia, Costa Rica, Ecuador, El Salvador, Guatemala, Mexico, Nicaragua, Panama, Paraguay, Peru, Uruguay and Venezuela) and estimate the determinants of foreign direct investment inflows in these economies.

The standard determinants we consider include market size variables (real GDP growth rates, growth rates of real per capita income and GDP), policy variables (the degree of openness, corporate tax rates, import duties, quality of infrastructure) institutional characteristics (indices of corruption, degrees of government stability, indices of the rule of law), labor market conditions (illiteracy rates and wage rates) as well as the global supply of FDI. To estimate the China Effect, we include in the empirical equations the levels of China's inward foreign direct investment. As China's foreign direct investment should also be dependent on foreign direct investment in other Asian and Latin American economies and other similar policy and institutional factors, we use a panel regression simultaneous equation model to estimate our coefficients, paying particular attention to the estimated coefficient of the China Effect.

The main results of our paper are as follows. First, in terms of the levels of foreign direct investment flows, the China Effect is positive for the East and Southeast Asian economies. For the Latin American economies, the China Effect is mostly insignificant and occasionally mildly positive. In other words, foreign direct investments to our Asian economies are complementary to direct investment into China, while foreign direct investments to the Latin American economies have little systematic relationship with direct investment going into China.

These results are consistent with the view that there is a thick and growing production network within these Asian economies and China, but except for Mexico, there is relatively little vertical production-sharing among the Latin American countries. Thus multinationals may want to set up factories and distribution network in both China and other parts of Asia to accommodate their increasingly sophisticated global supply chains, but they do not seem to view China and Latin America systematically as rival, alternative sites of business networks. For example, the top Chinese imports and exports to the East and Southeast Asian economies are generally in the electrical equipment industry (Table 3).³

Table 3: China's Two-Way Trade of Electric Equipment with its Neighbors, 2003

Second, in terms of the shares of developing countries' foreign direct investments, the China effect is negative for both the East and Southeast Asian economies as well as for the Latin American economies. Thus, while both the level of China's foreign direct investment and the levels of foreign direct investments of our Asian economies are increasing together and that there is no strong relationship between foreign direct investment into China and into Latin America, an increase in China's investment is associated with a decline in the Asian and Latin American shares of foreign direct investment of the developing economies.

Third, the China effect is in general not the most important factor determining the inflows of foreign direct investments into these economies. Specifically, market size variables and policy variables such as the lower corporate taxes and higher degrees of openness play larger roles in attracting investment.

Chantasasawat, Busakorn, K.C. Fung, Hitomi Iizaka and Alan Siu, 2003, "The Giant Sucking Sound: Is China Diverting Foreign Direct Investment from Other Asian Economies?" Asian Economic Papers, forthcoming.

Chantasasawat, Busakorn, K.C. Fung, Hitomi Iizaka and Alan Siu, 2004a, "International Competition for Foreign Direct Investment: The Case of China," COE-RES Discussion Paper Series No.22, Graduate School of Economics and Institute of Economic Research, Hitotsubashi University, Tokyo, Japan.

Chantasasawat, Busakorn, K.C. Fung, Hitomi Iizaka and Alan Siu, 2004b "Foreign Direct Investment in East Asia and Latin America: Is There a PRC Effect?" Asian Development Bank Institute (ADBI) Discussion Paper #17, November.

Chantasasawat, Busakorn, K.C. Fung, Hitomi Iizaka and Alan Siu, 2004c "Foreign Direct Investment in East Asia and China," Stanford Center for International Development (SCID) Working Paper #233, November.

ChinaOnline, "China's Rise is the Most Dramatic Change in Asia," November 14, 2002.

Eichengreen, Barry and Hui Tong, 2005, "Is China's FDI Coming at the Expense of Other Countries?" mimeo, University of California, Berkeley and Bank of England.

Lall, Sanjaya and John Weiss, 2004, "People's Republic of China's Competitive Threat to Latin America: An Analysis for 1990-2002," ADB Institute Discussion Paper No. 14.

Mckibbin, Warwick J. and Wing Thye Woo, "The Consequences of China's WTO Accession for its neighbors." Asian Economic Papers 2:2, 2003

New Straits Times-Management Times. "Future Flows of FDI into Asian Economies to depend on China," March 9, 2002.

Taiwanese Central News Agency. "Taiwan to Improve Competitiveness," November 21, 2002.

Weiss, John, 2004, "People's Republic of China and Its Neighbors: Partners or Competitors for Trade and Investment?" ADB Institute Discussion Paper No.13, Tokyo: Japan.

Zhou, Yuping and Sanjaya Lall, "The Impact of China's FDI Surge on FDI in South-East Asia: Panel Data Analysis for 1986-2001," mimeo, Oxford University, United Kingdom.

¹ There is of course a production network between Mexico and the United States. But in this respect, Mexico is quite different from the rest of Latin America.

² Mckibbin and Woo (2003) provides a calibration model to judge the effect of China's joining the WTO on its neighbors.

³ See Weiss (2004) and Lall and Weiss (2004) for analysis of trade relationship between China and East Asia as well as between China and Latin America.

K.C. Fung is Professor of Economics, University of California, Santa Cruz and Senior Research Fellow, Hong Kong Institute of Economics and Business Strategy (HIEBS), The University of Hong Kong.

Alan Siu is the Deputy Director of the HK Institute of Economics and Business Strategy and Associate Professor, School of Economics and Finance of The University of Hong Kong.

	Exports of Electrical Equipment to China (US$1,000)	Rank in Exports to China	Imports of Electrical Equipment from China (US$1,000)	Rank in Imports from China
Taiwan	17,075,435	1	2,470,679	1
Republic of Korea	13,224,831	1	4,122,382	1
Singapore	3,432,677	1	2,869,225	1
Thailand	1,984,551	2	888,914	2
Malaysia	7,179,539	1	1,587,136	2
Philippines	4,251,766	1	890,895	1
Indonesia	346,577	7	632,660	3

Source: Fung (2004), China's Custom Statistics Monthly, 2003, December.


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