Does FDI surge in China crowd out FDI in South-East Asia?

A decade ago South-East Asia excluding China was attracting four times as much Foreign Direct Investment (FDI) as China. Today the opposite is true. Over the past years, few developments in international economies have been more important than the sudden emergence of China as a dominant recipient of FDI in the world. It is not surprising that South-East Asian economies fear the Chinese 'threat': the sheer pace and size of China's inward investment growth, if sustained, threatens to seriously erode their position in world investment. This paper employs matrix method to analysis whether FDI surge in China crowd out FDI in South-East Asia by classifying three sub-periods (1987-1991, 1992-1996, and 1997-2002). We find that different stages have different situations. FDI in China is under threat from that in South-East Asia over 1986-1991. Except Philippine, FDI in most economies in South-East Asia is under threat that from China during the period 1992-1996. FDI inflow growth may be complementary rather than competitive over 1997-2002.