CONFIDENTIAL
year of the China Overseas Building Corporation (Hong Kong), under the State Council's Capital Construction Commission. The Corporation will conduct feasibility studies and negotiate overseas contracts before their final signature in Peking. According to the Corporation's Chairman and General Manager, Gu Tianxun, civil engineers and technicians from various fields in China will be sent to Hong Kong for work experience and to study building and management techniques.
Hong Kong's investment in China
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General
20.
Hong Kong's geographical proximity, the special advantages it has to offer, and China's encouragement of foreign investment, have all contributed to increased participation by Hong Kong businessmen in joint enterprises. As will be clear from the above (paragraphs 5 - 10), the distinctions between joint ventures, co-operative production and compensation trade are not always easy to define. There would seem to be a particularly thin line between the first two categories, sometimes described as 'equity' and 'contractual' joint ventures respectively. Of all such joint enterprises, however, there is no doubt that the majority are financed by Hong Kong businessmen. According to Hong Kong's Da Gong Bao on 9 December 1980,
equity joint ventures' had been signed by Chinese and foreign companies during the past year (list at Annex B) and most were financed by 'overseas Chinese compatriots in Hong Kong and Macau'. Referring to both
equity' and 'contractual' forms, NCNA reported on 12 December 1980 that more than 300 joint venture agree- ments had been reached during the past year. Neither report gave the total value of foreign investment in joint ventures.
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Hong Kong investment in the Special Economic Zones
21.
A vital factor in the development of new economic links between Hong Kong and China has been the granting of a greater degree of autonomy to Guangdong (and to a less extent, Fujian), giving the province wider flexibility in its management of external economic relations. Coupled with this has been the decision, taken in Peking, to open up special districts within the province where foreign investors would be able to invest under favourable conditions. The districts, termed 'Special Economic Zones (SEZs), would then serve as a catchment area for foreign participation through joint ventures, compensation trade or co-operative production (although. such ventures would by no means be restricted to the SEZs).
CONFIDENTIAL
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