Singapore is second most attractive destination for Chinese overseas investment

Singapore is the second most attractive destination for investors from China, behind just the United States, a new study has found. -- PHOTO: AFP
Singapore is the second most attractive destination for investors from China, behind just the United States, a new study has found. -- PHOTO: AFP

Singapore is the second most attractive destination for investors from China, behind just the United States, a new study has found.

Singapore garnered a score of 54.6 out of a possible 100, behind the 57.5 points recorded by the US in the research conducted by The Economist Intelligence Unit (EIU).

Hong Kong came in third with a score of 50.2 as the study ranked 67 economies based on their attractiveness to Chinese overseas investments using indicators such as the opportunities and risks presented.

All top three rankings were unchanged from a year ago, with EIU pointing out that the trio are developed economies sought out by Chinese firms.

Developed economies are favoured due either to their large market size, diversified economic structure, strength in intellectual property protection or low political and social risks.

Chinese investments in Singapore amounted to US$2 billion last year, compared with US$20 million in 2005, while Hong Kong pulled in US$62.8 billion last year, compared with US$3.4 billion in 2005.

The US leads the pack, drawing US$3.9 billion worth of Chinese investments last year compared with US$232 million in 2005, as it has a sizable natural resources sector and is strong in the area of intellectual property.

Singapore and Hong Kong have an advantage as they are very open to foreign investment, have excellent infrastructure, are places where it is easy for a firm to do business in and have healthy growth prospects.

But Singapore is ahead of Hong Kong as it presents better opportunities in having a more diversified economy while Hong Kong relies on a few sectors, according to the EIU.

Japan, meanwhile, seems to have fallen out of favour, dropping two places to sixth on the list as bilateral relations cooled.

The EIU said other factors working against Japan are decades of deflation and lacklustre economic growth.