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ITM Master 1. Sem. |
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China's Inbound FDI - Where does it come from? |
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The top sources of FDI into China in 2006 remained largely unchanged from previous years (see Table). Hong Kong continued to lead the list, followed by the British Virgin Islands, Japan, South Korea, and the United States. Taiwan, Singapore, the Cayman Islands, Germany, and Western Samoa rounded out the top 10.
Investment growth from Japan, South Korea, and the United States slowed in 2006, but overall FDI has been buoyed by inflows routed through Hong Kong and the British Virgin Islands, which jumped 13 and 25 percent, respectively. In fact, Hong Kong and the British Virgin Islands together accounted for more than 42 percent of China's total FDI inflows in 2006.
BVI second biggest investor in China?
MOFCOM, the State Administration of Foreign Exchange, and the State Administration of Taxation are concerned that as much as two-thirds of China's official FDI is actually the result of "round-tripping"--a phenomenon in which PRC funds are funneled out of China to return masked as FDI in order to become eligible for preferential policies available only to foreign investors. The phasing out of tax incentives for FIEs, combined with tighter regulations on such offshore entities, could lead to a tapering off in flows from such regions.
How important is China's OFDI on a global scale?
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Contact:
Prof. Dr. Wolfgang Georg Arlt FRGS |
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