JỤN.11 '87 18:56 IMF WASH DC RAPICOM6300 477-7491
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technical, 8% property development, 5% mining and farming and 7% other categories. Property development joint ventures constituted only 8% of the number of joint ventures but represented 42% of the investment amounts committed.
3.08 Although official data are not yet available, it is clear that the number of new foreign investment approvals in China declined in 1986, as equity joint ventures dropped from 1,370 in 1985 to 870 in 1986 and contractual joint ventures went from 1,544 in 1985 to 560 in 1986. The total amount of money committed in these joint ventures in 1986 has not yet been published by the Chinese authorities. Indications are that newly signed foreign investment contracts in 1986 fel1 48% to $3.31 billion, the first fall in investment since China opened up in 1978. However, government officials have noted that the amount of funds actually brought into the country in 1986 was up 10% to $2.12 billion, and that 76% of the projects approved in 1986 were in productive enterprises in fields such as industry, agriculture, transport and telecommunications; whereas, between 1979 and 1985, projects in productive enterprises were only 45% of the total. future, government officials have said that China will emphasize "productive" (by which they mean manufacturing) projects, and will curtail joint ventures in service projects such as taxi companies and tourist facilities, like hotels in the major cities of Beijing, Shanghai and Guangzhou. Because of this new approach there is some feeling that a fall in service industry projects, which have comprised more than half of China's total foreign investment to date, is likely to result this year.
3.09
In the
Despite problems over the past year, government authorities have been emphasizing the importance of foreign investment in China. example, the government, in response to complaints about high labor costs, low productivity and excessive bureaucracy, unveiled a new 22 point investment enticement package in October 1986. The package included ceilings on staff salaries, limits on arbitrary charges introduced by local governments, and longer tax holidays for joint ventures exporting at least 70% of output or that involve the transfer of high technology.
MARKET ANALYSIS
3.10 Based on the 1985 figures (the latest complete data available) there were more than 600 equity joint venture projects in the PRC each involving total capital in excess of US$1 million. (Generally, it is unlikely that CIC will seek to participate in projects having a capital of less than US$1 million.) Even if it is assumed that all of the joint venture projects involving less than US$1 million involved Hong Kong partners, that would still leave approximately 370 equity joint venture projects in 1985 which involved a Hong Kong partner and a further 274 projects involving non-Hong Kong partners, all with projects in excess of US$1 million.
3.11
There are a number of other recently established investment companies focusing on the China market, including China & Eastern Investment Company (Baringa), Tian An (formerly Sun Hung Kai China which includes Merrill Lynch and others) and Chinavest (Sponsored by the Orange Nassau Group). All of these are relatively small and are generally focused more on
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JUN.11 '87 10:57 IMF WASH DC RAPICOM6300 477-7491