Vietnam pushes for more Chinese investment
By Valarie Tan | Posted: 23 May 2012 2010 hrs
BEIJING: China's investments in the energy and minerals sector in some ASEAN countries have drawn criticism and in some cases, backlash in recent years.
But with investments and demand from Europe and the US dwindling, China's growing economic importance in the region cannot be ignored.
Rising labour costs in China have forced some manufacturing firms to relocate their operations to Vietnam in recent years. But Vietnam wants to be more than just a cheaper alternative to the world's second largest economy.
It held a business forum recently in Beijing to seek Chinese investments. Vietnam's Deputy Foreign Minister, Nguyen Thanh Son, called on Chinese firms to increase their presence.
He said: "Vietnam is working hard now to develop the economy. So there's great demand for facilities. And we know China has great potential in the basics of constructing ports, highways, airports and has many renowned enterprises with huge potential."
There are currently some 2,000 Chinese companies invested in Vietnam, valued at over US$3 billion, with mining and steel amongst the biggest projects.
But China's massive investments in ASEAN countries in recent years have drawn criticism and resistance from some locals. Sceptics view these investments as a way for China to buy up resources and for it to extend its political dominance in the region.
In 2011, Myanmar stopped construction of a Chinese-funded dam on the Irawaddy River worth US$3.6 billion, citing environmental concerns.
Territorial claims over islands in the South China Sea between Beijing and some ASEAN countries continue to draw tension.
In the case of the Philippines, the recent standoff with China over Scarborough Shoal, also known as Huangyan Islands, has spilled over to trade and tourism.
Vietnam, which also claims parts of the South China Sea, and has close military ties with the US in the form of recent naval exercises, could have made China more uncomfortable.
Still, bilateral trade between Beijing and Hanoi reached US$40 billion in 2011 and is expected to grow to US$60 billion by 2015 under a new five-year cooperation deal. Even though Vietnam has often been seen as a low-cost alternative to China for investors, both countries said they see each other as friendly competition for foreign investments.
Ma Mingqiang, Secretary of the ASEAN-China Centre, said: "Don't you think that China is big enough and so is Vietnam? So I don't think there's no room for competition. There's a lot of space for it. Some firms may have left China but there are still many more who stayed. I don't think there will be much impact on second-tier Chinese cities."
And despite the geopolitical friction, trade between ASEAN and China is expected to reach US$500 billion by 2015, making China ASEAN's biggest trading partner.
-CNA/ac
*ttp://www.channelnewsasia.com/stories/economicnews/view/1203143/1/.html
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