REPORT: PWC Issues and Risks for FDI

For more than a decade, the People's Republic of China (PRC) has experienced an unprecedented influx of Foreign Direct Investment (FDI). FDI has been used by foreign companies as an important means of entering China. This has a number of attractions, including low cost manufacturing resources and facilities, and the prospect of a huge consumer market. Before 1992, loans accounted for 60% of the total value of incoming foreign capital. In recent years, FDI has dominated the capital inflow, accounting for 70% of the total value. The Chinese Ministry of Foreign Trade and Economic Co-operation (MOFTEC) revealed that total inflows of FDI in 1996 amounted to US$41 billion, making it the second largest FDI recipient after the United States. Hong Kong constitutes the single largest source of FDI for China.

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