Inflow of Chinese Capital Causing Concern
The foreign direct investment in South Korea from the Greater China region increased 25.7 percent year on year to US$5.09 billion in the first nine months of this year.
Although the rate of increase is lower than those in the FDI from the European Union (173.2 percent) and Japan (33.8 percent), the investment from the region increased for the third consecutive year unlike the rest. Last year, the United States, Japan and the European Union reduced their investment in South Korea, but the investment from the Greater China region increased 26.5 percent.
According to industry sources, most of the investment from the region is going to the material, component and equipment industries, with China focusing on the growth of its semiconductor and display sectors. “The investment in the industries from the Greater China region added up to US$2.349 billion in that period, up 10.4 percent from a year ago,” one of them said.
They are concerned over the inflow of Chinese capital. A lot of South Korean fabless companies are already under the control of Chinese capital. For example, Dosilicon currently has the largest stake in memory chip developer Fidelix, Eswin took over OLED semiconductor manufacturer WideChips in 2017, and Silicon Micro Technology is the largest shareholder in mobile power chip manufacturer Silicon Mitus.
“The investment from the region is likely to continue to increase with the United States and the European Union trying to keep China in check in the semiconductor industry in particular,” the Korea Institute for International Economic Policy said.