The “ Hong Kong factor” in statistics on
foreign direct investment from China
Due to its special economic status, Hong Kong is listed sep-
arately in economic statistics. As a special administrative
region (SAR) , it plays a special role in China’ s investment
and trade flows. Chinese companies sometimes engage in
FDI through their Hong Kong subsidiaries, making China’ s
real FDI in some countries and regions higher than that
reported in the national statistics. This type of off-shor-
ing applies not only to investments fromHong Kong, but
also fromthe British Virgin Islands and the Cayman Islands
(Garcia-Herrero et al. 2015: 3). National FDI statistics do
not provide enough detail to identify Chinese investment
taking place through off-shore subsidiaries.
Hong Kong is also home to the phenomenon of
“round-tripping”, which involves circular investment by
Chinese companies in Hong Kong, which is counted as Chi –
nese FDI. The Hong Kong company then reinvests in China,
where it is considered a foreign investor and could poten-
tially benefit fromcertain privileges (Schüler-Zhou and
Schüller, 2009: 26; Jungbluth 2014: 52-53). This distorts
the investment volume in both directions.
One of the few attempts to estimate the effects of
“round-tripping” and “off-shoring” assumes that Chi –
nese FDI flows and stockwere about a quarter lower than
reported in the official Chinese statistics for 2013 (Gar-
cia-Herrero et al. 2015: 7).
Adjusted for the combined
effects of “round-tripping” and “off-shoring, ” the per-
centage of Chinese FDI in Europe is actually more than
twice as high as revealed in the national statistics (8%
of China’ s outward FDI stock and 6%of China’ s outward
FDI flows vs. 19%and 17%respectively).
This once again demonstrates the limitations of international and national
FDI statistics.
EU Forecast
euf:ba1.8i:73/nws-01