Recently, it is rumored that foreign capital
is being massively withdrawn from
China having a huge impact on the economy.
The Chinese Communist Party (
CCP)
has always denied this.
It used an article published by its mouthpiece media
People's Daily in August.
Despite its attempt to deny the rumors, the article further
uncovers some secret facts about the CCP's economy.
Let's see the following report.
On
August 12th, the People's Daily published an article
titled "
Foreign Investors Are Not Massively Retreating from China".
The article uses the CCP's
Ministry of Commerce statistics.
It claims that the total number of new foreign companies
dropped by 17.31% this June.
However foreign direct investment (
FDI) has increased by
20.12% during the same period.
Other statistics from the Ministry of Commerce show that,
between January and July
2013, newly registered companies dropped by 7.68%, but FDI has increased by 7.09%.
According to charts in the People's Daily,
the top ten source locations contributed to 92% of total foreign investments
in China between January and June of 2013.
Among them capital from
Hong Kong contributed to
39.7 billion
US dollars, or 65% of the total.
Singapore ranks third, contributing 3.3 billion dollars,
or 5% of the total.
The United States,
Germany,
Netherland and
France only
contributed 4.2 billion dollars, or 6.8% in total.
The distribution of foreign capital sources is very unusual,
but why is it like that?
US-based
Chinese economist
He Qinglian commented
that, although the CCP claims to rank second
in absorbing foreign capitals in the world, many of them
are fake ones which originally flowed out from China.
Feng Xingyuan, deputy director,
Unirule Institute of
Economics,
Beijing: "There have been more Chinese
business owners who emigrate first and then
invest their money back into China.
Others stay in China with foreign passports or green cards.
Some also move their money out of China first
before investing it back."
Feng Xingyuan said
Mainland China has many preferential
policies for foreign investments,
especially in economic development zones, so many
emigrant Chinese entrepreneurs went back to China just to use the conditions to make profit.
A US-based Chinese magazine "China in
Perspective"
recently published an article by
Cheng Xiaonong.
It revealed that Hong Kong, Singapore and some
other areas are popular choices for money laundering from the
Mainland.
Most investments from those places are originally
China's
domestic capitals with a foreign-like appearance.
Global Financial Integrity is a research organzation
located in
Washington D.C..
According to its December report about illicit financial flows ,
China's illicit outflow of capitals was about 23.6 trillion Yuan
between
2000 and
2011, accounting for about 50% of the
total illicit financial outflow from developing countries.
Yan
Lixin, an expert in money-laundering, estimated that
China's money laundered annually has exceeded one trillion.
Most of the outflows either directly go into Hong Kong or
pass through there as a conduit.
On
December 27th,
2012,
Bloomberg published an article:
"
Heirs of Mao's
Comrades Rise as New Capitalist Nobility".
The article said that, through investigation at least 18
descendants of the CCP's eight most senior leaders own or run entities linked to companies registered offshore.
It includes the
British Virgin Islands
and the
Cayman Islands.
According to
Gong Shengli, the chief researcher of Beijing
National Conditions Inside Reference, China's
120 biggest state-owned companies are all highly-profitable monopolies.
For example, the price of the same car is more expensive
in China than in
America by at least one-third.
This makes China's market a very good place for
speculative activities.
Gong further commented that, most state-owned
monopolies are controlled by the CCP princelings.
They make profits by changing of capitals, which leads to
the inflow and outflow of capitals in China.
Gong Shengli: "
Li Keqiang has repeatedly mentioned
the opening-up policy four times in only nine days.
He continues to talk about how
China's economy
should move forward.
This leaks the message that, there are some secret fears
within the operation of capitals or markets in China."
Global Financial Integrity's report revealed that a lot of
illicit money first left China as recorded FDI in off-shore financial pivots like Hong Kong and British Virgin Islands;
then they came back to Mainland China
as FDI from those places.
As a summary, the report believes such a complex money
laundering scheme is used by Chinese high net worth individuals to secretly accumulate wealth.
He Qinglian commented that, among the huge amount of
foreign capitals absorbed into China over years,
over 70% are indeed laundered domestic ones.
- published: 16 Sep 2013
- views: 238