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Chinese cities reporting inflated foreign investment data
2013-09-01
Some eastern Chinese cities have been found inflating the amount of foreign investments they receive by paying brokers to introduce US dollars from abroad, which adds to the financial burden of local authorities, the Chinese-language China Business News reports.
According to the news outlet, certain cities in an unspecified eastern Chinese province have been hiring brokering agencies in Guangdong to set up firms under the names of people based in Hong Kong and Taiwan.
The firms, which in actuality do not exist, then usher in US dollars, which means foreign investments for local governments.
The brokering agencies bring in the "foreign investments" for a reward from local authorities — 170,000 yuan (US$28,000) in return for every US$1 million introduced — according to a report by Gong Zhen, an official from the Central Committee of the Jiu San Society.
As a result of the practice, a city reported growth in the foreign investments for four consecutive years, according to Gong.
According to media reports, the city drew US$547 million in foreign investments in 2009, up 35.1% on an annual basis. The number went up 92.2% to US$1.05 billion in 2010, which then grew by 54.1% to US$1.61 billion in 2011. The city had reported a 30.9% growth in the foreign investments in 2012, the reports indicated.
Gong further stated that the rush to exaggerate the number of foreign investments peaked in 2010, which was a result of the pressure being faced by authorities to project their performance in a positive light.
Gong estimated that at least US$500 million in foreign investments that the anonymous city claimed to have gotten in 2010 was "bought," for a price of US$85 million.
The practice has greatly strained the financial capacity of certain cities and their townships, especially in some mountainous areas, which only have a small annual budget of 3 million yuan (US$490,000) at their disposal.
Some equally cash-strapped townships have even borrowed money to cover the expenses involved in having brokers bring in "foreign investments."
Chinese cities reporting inflated foreign investment data: paper｜Finance｜Business｜WantChinaTimes.com
Is there anything China doesn't fake?
2013-09-01
Some eastern Chinese cities have been found inflating the amount of foreign investments they receive by paying brokers to introduce US dollars from abroad, which adds to the financial burden of local authorities, the Chinese-language China Business News reports.
According to the news outlet, certain cities in an unspecified eastern Chinese province have been hiring brokering agencies in Guangdong to set up firms under the names of people based in Hong Kong and Taiwan.
The firms, which in actuality do not exist, then usher in US dollars, which means foreign investments for local governments.
The brokering agencies bring in the "foreign investments" for a reward from local authorities — 170,000 yuan (US$28,000) in return for every US$1 million introduced — according to a report by Gong Zhen, an official from the Central Committee of the Jiu San Society.
As a result of the practice, a city reported growth in the foreign investments for four consecutive years, according to Gong.
According to media reports, the city drew US$547 million in foreign investments in 2009, up 35.1% on an annual basis. The number went up 92.2% to US$1.05 billion in 2010, which then grew by 54.1% to US$1.61 billion in 2011. The city had reported a 30.9% growth in the foreign investments in 2012, the reports indicated.
Gong further stated that the rush to exaggerate the number of foreign investments peaked in 2010, which was a result of the pressure being faced by authorities to project their performance in a positive light.
Gong estimated that at least US$500 million in foreign investments that the anonymous city claimed to have gotten in 2010 was "bought," for a price of US$85 million.
The practice has greatly strained the financial capacity of certain cities and their townships, especially in some mountainous areas, which only have a small annual budget of 3 million yuan (US$490,000) at their disposal.
Some equally cash-strapped townships have even borrowed money to cover the expenses involved in having brokers bring in "foreign investments."
Chinese cities reporting inflated foreign investment data: paper｜Finance｜Business｜WantChinaTimes.com
Is there anything China doesn't fake?
