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Blog: Zhejiang and Decoupling

10-23 18:20 Caijing

Whose side of the coupling debate is winning now that Zhejiang Province has detailed its foreign investment boom?

By Jiang Aike

(Caijing.com.cn) All those fitful arguments about whether China has coupled or decoupled from the U.S. and European economies may flare again with the recent release of a foreign investment report by Zhejiang Province.

Wealthy, coastal and globally integrated Zhejiang has been an intense magnet for foreign investment since the turn of the century. It's near Shanghai and has good ports of its own. Someday it may overtake Guangdong Province in terms of manufacturing clout.

The report by the province's statistics bureau says 84 of the world's Fortune 500 companies now operate on Zhejiang soil. Foreign investment accounted for more than 27 percent of industrial output in 2008, up from 8 percent in 2000. International trade in the services sector, in areas from animation to information processing, is soaring.

Zhejiang has certainly come a long way since the 1950s when, the report notes, international trade revolved around frozen fish, rice and silk exported to the former Soviet Union and its allies. Its door to the rest of the world cracked open when trade with Hong Kong began in 1976.

But a particularly interesting factoid in the report raises an important question: Just how open is the door today? More than half of the province's foreign investment in 2008 came from firms that declared their business headquarters in one of two, small seaside locations -- Hong Kong, accounting for 40 percent of the year's FDI, and British Virgin Islands, with a whopping 13.6 percent. U.S.-based investment came in third, with 6.5 percent. Coupled, or decoupled?

Here's the report in Chinese: http://tjj.zj.gov.cn/art/2009/10/20/art_281_37475.html

Jiang Aike is a researcher at Caijing.

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