China will keep its status as the developing world’s top investment destination in coming years, attracting some $80 billion in 2010 while neighboring India lags behind, according to a study released Wednesday.
Foreign investment in Southeast Asia should rise, despite fears that investors might divert money to China, said the study by the Economist Intelligence Unit and Columbia University’s Program on International Investment.
Developing countries in Asia attracted a record high $177 billion last year in foreign direct investment, or FDI, by far the highest level for any emerging-market region, said the report. It said China accounted for $79.1 billion of that.
“China was far and away the main FDI recipient among emerging markets and will attract almost $87 billion this year,” said Laza Kekic, director of the EIU’s Country Forecasting Services, in a statement that accompanied the report.
The report’s conclusion suggests that China will be able to stay attractive to foreign investors despite rising costs and competition from other emerging economies such as Vietnam or India.
Among other leading Asian investment destinations, Hong Kong received US$35.9 billion last year and Singapore US$33.4 billion, it said. India was in a distant fourth place with US$6.7 billion.
China is forecast to receive US$80 billion in investment in 2010, while India’s figure rises to $14.3 billion, said the report, “World Investment Prospects to 2010: Boom or Backlash.”
“India still lags behind,” it said. “India has yet to build a critical mass in FDI, having only initiated investment-attracting reforms in 1991.”
China also is growing as a source of foreign investment as Beijing encourages companies to expand abroad, hoping to reduce reliance on export-driven manufacturing.
Foreign investment by Chinese companies jumped 123 percent in 2005 to $12.3 billion, according to government figures reported Tuesday by state media. It said top destinations were Hong Kong, the United States, Japan and Russia.