According to estimates from Credit Suisse Group, while wooing Southeast Asian nations with a proposal for a trade pact, China also had almost doubled its Foreign Direct Investment (FDI) into the six biggest nations in the SE Asean countries in 2016.
Santitarn Sathirathai, an economist at Credit Suisse in Singapore said, “China has a clear angle, they know what they want from this kind of mutually beneficial growth.”
“But it’s not only government to government anymore, there’s also a rise of private companies taking a bigger initiative,” he pointed.
The South China Morning Post reported, China transforms smaller Southeast Asian neighbors with railway, power plant and property investment.
Among others, the Philippines and Malaysia have already made clear efforts to ally themselves with China. In a recent trip to Beijing last month, the Malaysian Prime Minister Najib Razak has signed deals worth about US$30 billion (S$ 42,83 billion) ranging from the field of energy to rail infrastructure, and President Rodrigo Duterte has said in his visit to China that he wanted to cut the relation with the US, its former military ally, and turn to China.
Bloomberg wrote that according to estimates from HSBC Holding, even if the US is the largest investor in the Philippines, China is confident to take that appellation soon with hard and soft investment about US$24 billion (S$ 34,26 billion) and US$2.5 billion (S$ 3,57 billion) in inflows.
Credit Suisse calculated Chinese FDI in the six largest economies in the Association of Southeast Asian Nations (Asean) will come about US$16 billion (S$ 22,84 billion) this year.
In Indonesia, Chinese investment has gushed up, after five meetings in the past two years between President Joko Widodo and Chinese President Xi Jinping
China is now the third-biggest investor in Indonesia, behind Singapore and Japan, with FDI rising in the last nine months up to the end of September, from about US$600 million (S$ 856,55 million) for the whole of last year to US$1.6 billion (S$ 2,28 billion), Bloomberg reported.
Most of the countries in the region welcome China’s programs, even the countries having tensions with China.
The six largest Asean economies are expected to grow more than 3 percent this year.
Bloomberg wrote that Edward Lee, an economist at Standard Chartered in Singapore, said tourism is another industry that is set to benefit from Chinese utilities.
In his estimation he calculated about one of four of all tourists in Thailand now come from China, a 5 percent surge compared to 2008.
Lee said, “Chinese tourism is pretty big for Asean now, and all the countries rely on Chinese visitors to keep coming and keep spending.”
Thailand is one of a handful of Asean countries that offer Chinese tourists visas on arrival, while Malaysia has removed the need for visas for trips shorter than 15 days. Indonesia has also waived visa requirements for Chinese tourists last year.
The economic ties do not care about the political tensions that raised from conflict in the South China Sea. In waters where China has reclaimed thousands of hectares of territory and intensify its military presence, Asean nations including the Philippines, Vietnam, and Indonesia have overlapping claims. Tension was risen between Indonesia and China about access to the waters.
Harry Sa, a research analyst at the S. Rajaratnam School of International Studies in Singapore, said: “Countries have to bite the bullet, the fact of the matter is that China can do wonders for the economy and the countries in the region understand it”.
“[They] do welcome that, even the countries that have tensions with China,” he said.