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Myron Brilliant: China will begin to expand its presence in the developing world
June 27, 2011
What countries are the most sought after destinations for Chinese investment, and why?
When China began to invest overseas it first looked to invest in resources in the developing world. What we’re seeing now is a change. China is beginning to invest significantly in Western Europe and in the United States. Part of that is a fundamental shift in wanting to go from resource focused investments to more technology driven investments. It also demonstrates that they want to get into the big consumer markets and to do that they need to think beyond just trade and exports.
How strategic are China’s foreign investments, and how do they compare to outgoing U.S. or EU investments?
We tend to give China too much credit for being strategic in all of its investments. Clearly they have invested heavily in resources, which is important to them as their economy is growing rapidly and they need oil and other kinds of resources from abroad. However, we tend to put too much emphasis on China as a centralized government focused on every aspect of the economy, when in fact there are private enterprises developing and flourishing. Those companies now have capital to invest overseas because they recognize that they need to expand their market presence, their branding, their technology and their management and they can do that better by going overseas. So yes there is some strategic notion behind China’s investment, but as we grow into a new period of time, I think that shift will go much more into how the private enterprise looks at opportunities abroad and commercial opportunities.
Could China surpass the United States and Europe as a supplier of investment to the developing world?
The world has become a smaller place, and the United States and Europe will not control the world’s GDP as they did 25-40 years ago. We have to expect that China’s economic rise means that they will not only become a huge market that we can invest in and trade to, but that China will begin to expand its presence overseas in the developing world and also in markets like United States and Europe. As it relates to Africa and Latin America and other parts of the developing world, yes they are increasingly going to be competitors for the United States and Europe – we should expect that. They’ll get a bigger piece of what we hope is a bigger pie so everyone can gain. The question then becomes what does it mean for American companies? It means that we have to be more competitive. And what does it mean for American policy? It means we have to have the right policies behind allowing our companies to succeed in overseas markets.