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Wednesday, June 15, 2005

China and FDI

While it is rumoured that the Poles may well have to learn to distinguish between two identical twins who they could have as PM and President respectively, I am having difficulty separating one Brad from another. In particular since yesterday they both had posts on China (here, and here). Now if I get the time I may well add my own six-penny worth to this on Afoe later, but meanwhile this news about railway projects in China draws attention to one of the important details about FDI in China: it is about technology transfer. China has the capital internally to carry out such projects, what It may not have is the logistics and technical expertise, and what it certainly dopesn't have is the state of the art technology, at least it doesn't have it yet. Learning by doing.

China's eastern province of Shandong has called for overseas investment in up to six new railway lines, opening the way for what analysts say would be the first wholly foreign-owned track to be laid since the 1949 communist revolution.

Foreign railway ownership has been a sensitive issue in China since colonial powers outraged many by building lines deep into the interior during the 19th century decline of the Qing Dynasty.

Now Beijing sees foreign investment as an important way of accelerating construction of the nearly 30,000km of track China plans to build before 2020.

But the enthusiasm of international investors for what is one of the world's biggest railway construction booms may be undermined by a lack of regulatory clarity and vulnerability to bureaucratic whim.

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