CONFIDENTIAL # B
Problems facing Sino-foreign joint ventures in China
Introduction
Annex I
It
China's adoption of the open door policy in 1979 marked a new era in its economic development.
represents a departure from the self reliance principle which had been followed since the Soviet withdrawal in the
early 1960s. The current thinking of most Chinese leaders
is that with proper planning and implementation, foreign
capital and technology can help China's economic growth
and development. Thus since 1979, various forms of
foreign investment have emerged in China. In the initial stage, economic co-operation mainly took the forms of outward processing arrangements and compensation trade.
By now, other more complex forms such as equity joint
ventures, contractual joint ventures, joint exploration
and wholly foreign owned firms have also been set up. A
table summarizing the characteristics of the different
forms of foreign investment in China is given in
Annex I.
2.
Due to established economic links, cultural ties
and geographical proximity, Hong Kong has become the major
source of direct foreign investment in China. Moreover, many overseas enterprises have joined with Hong Kong companies to develop their business in China. Available information shows that of the total investment in equity
joint ventures in China during 1979 - 1985, 80% came from Hong Kong. As regards investment in contractual joint
ventures between 1979 and end March 1986, 56% was
contributed by Hong Kong (1).
(1)
USA and Japan accounted for 22% and 21% respectively of the total.
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CONFIDENTIAL # 3