Do fiscal incentives predict foreign direct investments?

The prolonged trade war between the US and China, the world’s two largest economies, is hurting both countries and it is thus seen as a threat to the global economy. Yet for developing countries, especially in Southeast Asia, the ugly trade war is an opportunity, for this economic war translates into a redirection of trade and investments. Indeed, having been affected by the trade war, many companies with global value chains based in China have moved out or are seriously considering their exit.

A survey done by the Nikkei Asian Review in early September and reported on Oct. 4 says that at least a fourth of Japanese companies with a supply chain centered on China, are considering the reduction of their “China footprint.” This spells trouble for China, but this is welcome news to other emerging economies. Will this be the new version of a Japanese wave of investments in Southeast Asia?

So far, the main beneficiaries of new investments, Japanese or not, resulting from the exit of companies in China are Vietnam, Thailand, and Cambodia.

In full:

Related Stories

Latest News