Vietnam riots 'will hurt investment from China'

"These changes could make Vietnam more vulnerable to unexpected financial risks. It cannot afford having a worsening business environment with China as its economic development level is far behind Japan or the United States," said Li Quan, deputy director of the School of International Trade and Economics at Peking University.

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China's investment in Vietnam increased sharply in 2013, with 89 newly licensed projects and capital injections into existing 11 projects, bringing the total investment to more than $2.3 billion. That was up from $371 million in 2012, data from the Beijing-based China Chamber of International Commerce show.

Li said companies in China's Pearl River Delta region will no longer consider Vietnam as an ideal destination, and Cambodia and Myanmar are likely to gain at Vietnam's expense.

Xiao Yanlan, a superviser in the communications department of Guangdong Midea Electric Appliances Co Ltd, which has invested $25 million in production facilities in Vietnam, said that Midea is reviewing the situation and will do "whatever it takes" to avoid risks.

Long Guoqiang, director-general of the general office of the Development Research Center of the State Council, said if the unrest isn't addressed promptly, it will definitely affect the bilateral investment and trade relationship.

"For any country, a stable political environment is an important component of the investment environment. If Vietnam still wants to attract more foreign investment and develop its foreign trade, the rational choice would be to appease those behind the unrest immediately," Long said.

Zheng Yangpeng contributed to this story.

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