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China Table of Contents




Since 1949 China has devoted a large percentage of investment to industry. By 1983 investment in industry was approximately 57 percent of investment in fixed assets. In 1984 about -Y44 billion (for value of yuan---Y--see Glossary), or roughly 30 percent of total state expenditures, was slated for capital construction. In 1981 the leadership attempted to limit uncontrolled, excessive investment in capital construction. The results were not especially positive--partly because of reinvestment by enterprises allowed to retain profits, and partly because of foreign investment.

To supplement domestic sources of capital, China's leadership began allowing virtually all forms of foreign loans and credit by the end of 1979. By early 1980, the country had access to the equivalent of almost US$30 billion in foreign loans and credits termed through 1985. The Chinese also sought foreign capital by encouraging joint-venture projects between Chinese and foreign enterprises (see Foreign Trade , ch. 8). But, in early 1986, foreign companies viewed China as a high-cost and high-risk investment area. In 1985 US$8.5 billion worth of foreign capital had been committed, compared to only $US500 million in the first quarter of 1986.

Data as of July 1987