Vietnam sees increasing Chinese FDI in 2 months, becoming second largest investor after Singapore

[Viet]

Wrong, investment is always about money, or lack of it, you don't see Greece or Spain or Brazil as active global investors for a reason.

Let's see the fundamental of international financials. Outbound FDI is one part of a nation's owned external Assets, alongside with Portfolio, Financial Derivatives, Others (e.g. Loans, Trade Credits), Reserves, these are standard IMF classification. Same structure on the opposite side - Liabilities - owned by foreign nations. Followings are some samples:

http://www.mof.go.jp/international_policy/reference/iip/201609a.pdf
http://bea.gov/newsreleases/international/intinv/intinvnewsrelease.htm
http://www.bundesbank.de/Redaktion/...rmoegen_quartal.en.pdf?__blob=publicationFile
http://www.singstat.gov.sg/methodologies-standards/data-dissemination-standard/national-summary-page​

Therefore naturally, nations with large Assets and small Liabilities have more resources to conduct outbound FDI. Note, those owning more international assets than liabilities they owe are called Creditor Nations, largest ones are Japan, Germany, China Mainland, Hong Kong, Taiwan, Switzerland, Norway, Netherlands, Singapore, Saudi Arabia and GCC states. In the opposite it's the longer list of Debtor Nations, I'll leave it to you to find out the names, most nations are.

Moreover, Assets and Liabilities do change over time, see Current Account. Again, naturally nations with Current Account surplus have steady stream of resources to conduct outbound FDI. Nations with largest current account surplus include China Mainland, Germany, Japan, South Korea, Netherlands, Taiwan, Switzerland, Russia, Singapore, Norway. Likewise, you can find out the long list of nations with current account deficit.

You have the point. Of course you can only buy a house if you have money or are able to pay back the debt. Sure, nations can only lend money if they have money. Usually those countries are leading exporters or rich of natural resources with only few own people to feed. Coming back to Vietnam. Samsung and LG open smartphone factories, why not American companies? The answer is simple, because the Koreans have both money and technology, producing phones with a lowest costs, generating max profits. It is the technology and soft factors not because US cooperations lack money. It doesn't matter that the US government is highly indebted. Japan central government is more indebted. That doesn't hinder the government lends money nor stop Japanese companies to invest.

The Germans accumulate huge money due to gigantic trade and current account surpluses over decades. At the beginning they bought thousands of tons of Gold. Well today they don't buy Gold, but acquire assets all over the world.

To cut the story short, Vietnam should copy from the best, mixing it with domestic ingredients, finding out a way to move forward.

To lure big US cooperations to open offices, factories, R&D centers to Vietnam is the challenge.

 

[Shotgunner51]

You have the point. Of course you can only buy a house if you have money or are able to pay back the debt. Sure, nations can only lend money if they have money. Usually those countries are leading exporters or rich of natural resources with only few own people to feed.

You are right. Among over 190 nations in the world, there are three credit hubs - East Asia (include SG), Germanic-Nordic region, and GCC - while rest of the world are mostly debtor nations, see below link. The former two are tech-industrial centers to backup financial clout, third one has oil wealth. Looking forward, several major events may continue to re-shape the global financial landscape: reform in international settlement currency, China's tectonic shift of macroscopic asset management (pivot on sovereign wealth funds), interaction between Germany and debtors in Eurozone, Saudi Aramco IPO and strategic shift of GCC sovereign wealth funds.
https://defence.pk/pdf/threads/whos-worlds-4th-largest-creditor-nation.455610/

It doesn't matter that the US government is highly indebted. Japan central government is more indebted. That doesn't hinder the government lends money nor stop Japanese companies to invest.

The critical difference here is whether the government owes debt to domestic investors or foreigners. I have explained in #35 here: https://defence.pk/pdf/threads/into...-japan-in-thailand.409333/page-3#post-7903092
In the former case, it's like an accounting treatment of domestic wealth appropriation, no currency issue involved. In the latter case (negative international position), compounded by sustaining current account deficit (deteriorating international position), these will potentially impact a nation's currency valuation, hence making it more costly for companies to conduct FDI. Well, unless of course such currency is used as reserves internationally. So at the present moment, you are right, but I am not so sure in the long run.

The Germans accumulate huge money due to gigantic trade and current account surpluses over decades. At the beginning they bought thousands of tons of Gold. Well today they don't buy Gold, but acquire assets all over the world.

Yes, trade or current account surplus, that's exactly how nations build up huge net assets. Then they may do these:

1. FDI, center of discussion in this thread. It could be greenfield FDI, or M&A of assets like you have just mentioned. Japan has done this for decades, so is Germany to a lesser degree, and China is now pivoting to this category by all means including the massive buildup of SWF, such model has been proven successful by GCC, Norway, Singapore and HK.
   
2. Financial reserve assets; Say gold (China being largest producer of gold so doesn't need to book domestic produce as reserves assets), or Forex (China has been hoarding way too much in this category, even more than Japan at some times, now pivoting away).
3. Portfolio, in fact it's a major category for many nations with internationalized financial markets (stocks, bonds, etc), but very insignificant for China due to RMB is not freely convertible under capital accounts.
   
4. Others, say loans, or trade credits to export destinations. Germany is top lender in Eurozone as well as the whole continent, where over 2/3 of states are indebted. China is also increasing in this category, extending focus from traditionally Africa, LatAm to OBOR (CPEC), CEE.
   
5. Non-financial reserve assets, say SPR, rare earth, etc., but these are not reflected in financial statements. By looking at bank statement everyone knows Japan is largest creditor nation, but fewer people know Japan also has massive assets in this category.

 

[Viet]

PM Lee Hsien Loong: Singapore's ties with Vietnam prospering



http://www.straitstimes.com/politics/pm-lee-hsien-loong-singapores-ties-with-vietnam-prospering

Happy to see Singaporeans helping to alleviate child poverty in developing countries in the region. Children are the future pillar of the country and should at least be given basic education.

You make a good job. Just in the statistics, Singapore has poured $1b into Vietnam this year in the first quarter. China is close. But nobody can't beat the Koreans right now. They remain on the top. In total nearly $7b new money are flowing into Vietnam in the first 3 months. Should the trend continue we will see $28b FDI this year. A new record.