Hong Kong Tops League Of Foreign Investors Into China

by Mary Swire, Tax-News.com, Hong Kong

12 February 2003

An annual survey of foreign investment in China from the Ministry of Foreign Trade and Economic Co-operation (Moftec) shows that Hong Kong and the British Virgin Islands were the top two foreign investors last year. The figures, published yesterday, put Hong Kong in first place with US$19.17 billion invested, followed by the BVI with US$6.15 billion. The next eight were the US, Taiwan, Japan, South Korea, Singapore, Cayman Islands, Germany and Britain.

It's well known that much of this investment is not 'foreign' at all, but is mainland and Taiwanese money recycled through offshore locations to avoid oppressive local regulations, minimise tax, and escape the corruption endemic in China's economic system.

Moftec Economic Research Institute economist Ma Yu said that, while there was little change last year in the order of investors from the previous year, the long-term trend was a rise in investment from Europe and the US and a fall in the proportion of investment from Asia. Bucking this trend, though, was an increase in investment from Japan, brought about by a significant change in the terms of trade for domestic Japanese companies.

Mr Ma said that considering that Europe and the US accounted for more than 60% of foreign investment worldwide, their mainland investments were small. "This is, in part, due to restrictions in sectors such as finance and telecommunications that should gradually be lifted under commitments made as part of joining the World Trade Organisation," he said.

Recommended