Round-Tripping Foreign Direct Investment in the People's Republic of China: Scale, Causes and Implications

There is no doubt that part of the Foreign Direct Investment (FDI) inflows to the People's Republic of China (PRC) belong to the return of Chinese capital that has gone abroad to escape foreign exchange controls.

The World Bank and other agencies and experts have estimated that the scale of this round tripping could be as high as a quarter of the total FDI inflows into PRC (see World Bank 2002). But the World Bank did not provide clear definition of round tripping FDI and did not explain its estimation method.

This paper attempts to fill this gap in the literature by providing an estimation of the overall scale of PRC's round tripping FDI with detailed description on the methods and assumptions. The paper also clarifies a few conceptual issues related to the different types of round tripping FDI and their measurement problems.

See the discussion paper.