Jumping 19.8% to a record US$6.5 billion despite rising tensions between the two Asian rivals, Japanese investment in China in 2005 increased ,the Japan External Trade Organization (JETRO), a government trade industry, said in a report released on April 3.
The increase also came as other countries such as the U.S. and South Korea decreased their investment in the regional economic powerhouse. JETRO cited renewed confidence in China among Japanese businesses as a reason for the increased spending. Investment picked up in the second half of the year as sentiment recovered from the effect of anti-Japan protests in China in April 2005.
Rising demand for vehicles encouraged large-scale investment by automakers and auto parts manufacturers, JETRO said. Companies such as Toyota are expanding their production activities in China to take advantage of the vast, cheap labor pool and a fast-growing market for their goods.
Healthy demand for electronics as well as deregulation allowing full ownership of certain companies by foreign firms also encouraged Japanese investment in China.
At the same time, investment in China from Hong Kong fell by 5.5%, with South Korea down 17.3% and the U.S. down 22.3%, JETRO said. In total, foreign investment in China edged down 0.5% to $60.3 billion in 2005, the report said.
Copyright Agence France-Presse, 2006