G.F. 326
CONFIDEN
ONFIDENTIAL ☆ ☆
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PART VI: HONG KONG AS A SOURCE OF DIRECT INVESTMENT
IN CHINA
(a) Background
47.
Until recently, the People's Republic of China Government was suspicious of foreign investment in China. Foreign investment was looked on as one form of "imperial exploitation", the heyday of which was during the second half of the 19th Century and the first half of the 20th Century, when China was in chaos and involved in civil wars. This attitude was
significantly changed only in 1977. But the major breakthrough occurred still later in 1979 when China promulgated its joint-venture code, gave Guangdong and Fujian Provinces greater autonomy in the matters of foreign trade and investment, and formally designated four cities - Shenzhen, Zhuhai and Shanton in Guangdong and Xiamen in Fujian as 'Special
Economic Zones (SEZs)".
48.
Substantial foreign investment has been channelled into China since 1979 in various forms; the more important ones are known as equity joint ventures, contractual joint ventures, joint developments (mainly for off-shore oil exploration), compensation trade and processing and assembling of supplied parts and components. According to a document, "Investment in China", edited by Wen Wei Po, the total amount of foreign investment in China in the three years 1979, 1980 and 1981 is estimated to have been in the region of about US$3 billion. But this is calculated according to the amounts
agreed upon in the contracts, not the amounts actually spent, which may have been substantially
smaller than the contracted total.
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