JUN.11
'87 10:55 IMF WASH DC RAPICOM6300 477-7491
-7-
Foreign Investment Approvals in PRC 1979-851/
P.015
1979-81
1982
1983
1984
1985
TOTAL
Equity Joint Ventures
Number
54
29
107
741
1,370
2,301
Total Project Costs2/ 99
(US$million)
29
212
1,060
1,970
3,370
Contractual Joint Ventures 3/
Number
390
402
255
1,165
1,544
3,756
Total Project Costs2/ 1,800
926
224
1,460
3,673
8,083
(US$million)
1/
It should be noted that a number of "approved joint ventures" may not be implemented due to a variety of factors, including the inability of the joint ventures to raise the necessary finance. Figures exclude investments by companies in setting up representative offices in China.
2/ "Total Project Costs" refers to the amounts indicated at the time
the joint venture was approved, including the investments by the Chinese partner. Actual investment may be different due to changes during project implementation.
3/ This category includes oil exploration contracts and at least one coal project which, although small in numbers, involve very large amounts of money.
3.05 of the equity joint ventures in 1985, 53% involved projects having total investments of less than US$1 million and 38% were projects in which the total investment was between US$1 10 million. Although 80% of the
- equity joint ventures involved Hong Kong foreign partners, only 58% of the foreign funds committed originated from Hong Kong. While one may correctly infer from this that the Hong Kong investments tended to be among the smaller ones, it must also be noted that the amounts invested are distorted by a handful of very large projects. For example although European investors accounted for only 4% of the equity joint venture partners in 1985 their investments represented 16% of the total funds committed by foreigners (second only to Hong Kong investment in terms of funds committed) because of a few large projects, including Shanghai Volkswagen (US$180 million equivalent), Pilkington Glass Ltd. (US$99 million equivalent) and Guangzhou Peugeot Automobile Company Ltd. (US$80 million).
3.06 Equally detailed information was not available concerning the contractual joint ventures. However, in general, these are believed to follow a similar pattern, with a very high participation by Hong Kong partners, especially in the smaller joint ventures, and a few very large contractual joint ventures, especially the coal and oil exploration agreements.
3.07 A similar distortion occurs in the analysis of the 1985 joint ventures on a sectoral basis. In terms of the number of joint ventures 54% are light industries and services, 16% electronics, 10% engineering and