China's stellar growth is benefiting Southeast Asia more than it is hurting it, according to an economic report that appears to challenge conventional wisdom.
For years, economists and regional leaders have warned of China's rise at the expense of the 10 members of the Association of Southeast Asian Nations. However, the Deutsche Bank report shatters several assumptions that have underlined previous arguments.
'In terms of growth in foreign direct investment and exports, empirical evidence suggests that some Asian economies have gained while others have lost, which may not be necessarily be attributable to China's emergence,' Deutsche Bank said. 'In addition, China's emergence has had many positive impacts on the rest of Asia.'
A typical argument has been that China is sucking up the foreign direct investment coming into the region. However, the report finds that its percentage share of FDI has risen only marginally. In 1995, it absorbed 53 per cent of FDI; in 2000, it took in 54 per cent. Taiwan absorbed 2.3 per cent of FDI into the region in 1995 and 6.5 per cent in 2000. South Korea gained substantially, with only 2 per cent in 1995 and a whopping 13.6 per cent in 2000.
Aside from Indonesia, the flow of investment into Southeast Asia remained largely unchanged. Indonesia absorbed 6.4 per cent of FDI into the region in 1995 and lost the equivalent of 6.1 per cent of regional FDI in 2000.
'Southeast Asia . . . is still attracting reasonable amounts of FDI despite China and the damage wrought by the Asian financial crisis,' the report stated.
