According to a report by Caribbean Net News, a clampdown on the offshore activities of Chinese enterprises may come after data released by the Ministry of Commerce of China showed that between January and May 2007, Hong Kong topped the capital investment table, followed by the British Virgin Islands, Japan, South Korea, Singapore, the USA, the Cayman Islands, Samoa, Taiwan and Mauritius.

The report stated that the figures reflect the actual amount of foreign capital invested in the various jurisdictions, which accounts for 86.16% of China’s total foreign capital.

China is currently in the process of overhauling its tax laws, in part to reduce the incentive for domestic companies to 'round trip' offshore in order to qualify for generous tax incentives currently afforded to foreign-backed enterprises based in China. At present, domestic firms must pay corporate tax at a rate of 33%, but foreign-owned firms can reduce their rate through various tax breaks down to as low as 13% in some cases. By round tripping, where Chinese groups set up shelf companies in Hong Kong and elsewhere, domestic firms can use them as mainland investment vehicles in order to qualify for "foreign" rates of tax. This practice has inflated China's foreign direct investment figures for years.

The global debate over whether offshore financial centres facilitate international tax avoidance has once again been brought to centre stage after US lawmakers decided to round on the Cayman Islands in their bid to close the 'tax gap' between what is legitimately owed and what is actually paid by US corporate and individual taxpayers. Senator Max Baucus, who is leading the charge, accused US companies who register in the Cayman Islands of "setting up shop at the beach just to avoid their tax obligations".

The US Senate Finance Committee, which has jurisdiction over tax legislation, has requested that the US Government Accountability Office (GAO) send an investigative team to the Ugland House building in the Cayman Islands, which, as the Cayman headquarters of international law firm Maples & Calder, acts as the registered office for thousands of companies, US and otherwise.

In their defence, leaders of offshore financial centres say that they are a vital cog in the wheel of international finance, and that they adhere to stricter regulatory regimes than practiced in many large onshore countries. "(We) have absolutely nothing to hide" Cayman Islands Leader Kurt Tibbets stated recently, in response to the US Senators' request, which has been widely ridiculed as a piece of political grandstanding.