Foreign direct investment
Hong Kong pioneers’ contribution to China through FDI
Published 13 September 2017 | 1 minute read
Hong Kong companies have been pioneers in many if not most aspects of China’s economic opening. Hong Kong companies have been able to serve and leverage the Chinese economy earlier than firms from other economies, in sectors such as light manufacturing, infrastructure, transportation or real estate.
This has benefitted China and has allowed Hong Kong companies a much broader reach and scope than if they had stayed at home. The result has been an economic integration that has helped modernize and internationalize China’s economy.
This white paper includes the following key findings:
- Hong Kong has been the largest single source of foreign investment into the Chinese Mainland. From 1985 to 2014, Hong Kong was the source of USD 744.8 billion in foreign direct investment (FDI), or 47 percent of all of the FDI into the Chinese Mainland, according to Chinese statistics.
- Hong Kong companies have been pioneers in many aspects of China’s development and particularly its interaction with the rest of the world. Hong Kong companies helped develop the supply chains and production systems that made China one of the world’s leading manufacturing and export locations. They were also early investors in the infrastructure that helped link China to the global economy.
- While the relative importance of Hong Kong investors has diminished over the years, they still make vital contributions to China.
China’s economic reforms have created the world’s most dynamic economy. A major part of China’s economic development has involved foreign companies. This white paper contains an excerpt from a larger project initiated by the Hinrich Foundation and undertaken by Enright, Scott and Associates on the impact of foreign investment and foreign enterprises as a whole on China’s economy.
The results of the larger project were published in a book by Michael J. Enright, Developing China: The Remarkable Impact of Foreign Direct Investment (Routledge 2017). Using the tools of economic impact analysis, the author concludes that foreign direct investment (FDI) has contributed 33% to China’s GDP and 27% to its employment in recent years. The book offers a balanced and rigorous view of the full impact of FDI – using China as an example to illuminate the mutually beneficial partnership between investing companies and host economies – and more importantly, serves as an effective toolkit for policymakers and corporations to approach FDI globally. It is available in English and Chinese. Read the related article to learn more about the book.