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requirement to obtain import licences in respect of
machinery, equipment and parts imported for the purpose of
production for export.
18.
The Chinese authorities clearly hope that the
above measures will boost the inflow of direct foreign
investment, which showed signs of slowing down in 1986.
In terms of numbers, China was involved in 870 additional
equity joint ventures and 560 additional co-operative joint ventures in 1986. These figures represent substantial declines over 1985, when there were
additional 1 369 equity joint ventures and 3 140
co-operative joint ventures. In terms of pledged
investment (which serves as an indicator of investment
intentions), direct foreign investment, including that for compensation trade, totalled US$3.3 billion in 1986,
compared with US$6.3 billion in 1985. On the other hand,
reflecting the commencement of works relating to the large
number of projects agreed on in 1984 and 1985, the amount
of realised investment increased by 10% over 1985, to
US$2.16 billion in 1986.
19.
To a large extent, the decline in pledged
foreign investment in 1986 was related to China's renewed
emphasis on the the need for Sino-foreign joint ventures
and wholly foreign-owned enterprises to balance their own
foreign exchange accounts. China's wish to commit fewer
resources to service-related activities like hotels was
also a contributory factor. With the extension of the
preferential treatment for foreign enterprises and joint ventures and with the greater scope for import
substitution permitted in the twenty-two new provisions and in other local regulations, the general investment climate in China is expected to improve. On the other
hand, despite reassurances that China's policies towards
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