Mainland ventures skid
MARK O'NEILL in Beijing
A record number of foreign-invested ventures were wound up in the mainland last year and the government failed in its policy of attracting more investment into the poor central and western regions.
These were two of the findings of a detailed report on foreign investment last year, which was compiled by the National Industry and Commerce Bureau and published by the China Business Times.
Last year, the mainland attracted 18,674 new foreign ventures, a drop of 3.23 per cent from 1997.
The registered capital totalled US$31.93 billion, down 13.55 per cent.
The report revealed Beijing failed to lure foreign investors from the eastern coast to the centre and west.
Last year, just six provinces and cities accounted for 65 per cent of the foreign investment with Guangdong on top, followed by Shanghai, Jiangsu, Fujian, Liaoning and Shandong.
The central provinces attracted 2,233 projects, down 12 per cent, with foreign capital of $2.55 billion, down 26 per cent, and western provinces won just 894 projects, down 15.42 per cent, with foreign capital of $1.42 billion, up 2.59 per cent.
During the year, 26,400 foreign ventures applied to be wound up, of which 19,884 were closed, a record for a single year and more than double the figure for 1997. This was a result of stricter inspections of the ventures and because the Asian financial crisis forced some foreign companies to pull out.
Many of ventures were what are popularly known as 'fake foreign devils' or jia yang guizi, set up with 100 per cent mainland money that has been routed through Hong Kong, the United States or elsewhere in order to enjoy the privileges extended to foreign-invested companies. Often these ventures do not have any actual business operations.
The extent of the closures, which outnumbered the new ventures, meant that the total of foreign-invested firms in the mainland at the end of last year, 227,800, was a drop of 3.34 per cent against a year earlier.
Asian investment fell sharply last year. Capital from Japan was $984 million, down 33.55 per cent, from Singapore it was $959 million, down 51 per cent, from South Korea it was $501 million, down 46.07 per cent, and from Malaysia it was $115 million, down 55 per cent.
This was in part compensated for by increased inflows from Taiwan, the US, Canada and Germany.
But investment from Britain fell 54.03 per cent to $448 million and from France it was down 73.64 per cent.
As of the end of last year, Hong Kong accounted for 53.46 per cent of foreign-invested projects, Taiwan was second with 12.13 per cent, the US had 8.48 per cent, Japan 6.36 per cent, South Korea 3.69 per cent, Singapore 2.89 per cent, Macau had 2.19 per cent and Canada 1.25 per cent.