Japanese Investment In China Unlikely To Rise

Japan External Trade Organization report: 'Manufacturers' initial investments to China have been all but completed.'

BEIJING (Kyodo) — Japanese investment in China, which dropped in the first half of 2007, is unlikely to pick up in the near future as manufacturers scale down investments in the country, a Japanese trade organization said Thursday.
Even as Japanese investment overseas more than doubled in the January-June period, that to China dropped 11.2 percent from a year earlier to 342.8 billion yen ($2.99 billion) in the same period, the report by the Japan External Trade Organization quoted Japanese data as saying.
The drop comes after a sharp rise in Japanese investment in China in the first half of this decade, particularly after the country's joining of the World Trade Organization in 2001, according to the report compiled by JETRO's Beijing office.
''Manufacturers' initial investments to China have been all but completed, and those in the future will be for enlarging existing facilities or for sales, so a major increase in the near future is not expected,'' the report said.
While investment in such fields as wholesale and real estate is showing signs of an increase, ''the amounts involved in each case are small, so they have not reached a point where they will cover the drop in the area of manufacturing,'' the report said.
The report also said Japanese manufacturers no longer are investing mainly in China but also diversifying investment destination to hedge risks.
In contrast to a drop in Japanese investment in China, that to Southeast Asia from January to June shot up 72.8 percent from a year earlier to 427.5 billion yen, while that for India quadrupled to 107.3 billion yen, the report quoted Japanese data as saying.
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