People's Republic of China and Its Neighbors: Partners or Competitors for Trade and Investment?

Abstract

The very rapid economic growth of the People’s Republic of China (henceforth PRC), its dramatic success in world export markets and its heavy receipts of foreign direct investment (FDI) have generated much thought and debate in policy and business circles in different parts of the world. From Malaysia to Mexico and from Indonesia to India the simple ‘threat or opportunity’ question has been posed in relation to the ‘rise of PRC’. Given the impact of geography on trade and investment patterns, such concerns have been greatest amongst PRC’s most immediate neighbors. This paper examines the evidence from a number of recent empirical studies that address different aspects of this issue in the context of PRCEast- South East Asia economic relations. The broad consensus is that whilst there may be risks to individual sectors in all countries concerned the pattern of regional trade and investment that is emerging is mutually beneficial, provided enterprises and governments in PRC’s regional partners respond effectively to the adjustments required.