Foreign Direct Investment (FDI) hit US$60.33 billion in 2005, following on from 2004’s US$60.63 billion. The main investment sectors were reported to be high-tech, machinery and electronics (although an official noted that the figure excluded investment into Chinese banks). Accumulated FDI is now US$600 billion.
Hong Kong was the top source of funds (29.75 percent of the total), reflecting its position as a regional business centre – as well as the “round-tripping” of mainland funds to gain tax and other benefits that are given to foreign investors. Investment from the EU rose 22.5 percent, while that from the US dropped 22.3 percent.
Central and western China saw a 27.7 percent jump in FDI inflows, compared to just 2.59 in the eastern provinces, as investors take advantage of improved business infrastructure, better incentives, lower costs and increasingly affluent consumers.
Hunan led the field in central China, with 729 foreign enterprises contracting US$4.24 billion of investment ? up 62.8 percent on 2004 (actual FDI was up 46.16 percent to US$2.07 billion).
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