How Foreign Firms Dodge Taxes in China – Olivia Chung

From Asia Times:

Since China opened its doors in the late 1970s, foreign investment has kept flowing in. Thousands of foreign-invested companies are set up across the country each year. But are foreign enterprises making profits or losses in China?

According to official statistics, as of the end of 2005, there were about 500,000 companies with foreign investment registered in China. Of those, about 330,000 had started operating. About 55% of the foreign companies operating reported losses between 2001 and 2004. In 2005, the figure dropped to 42.96%. It seems strange that while Chinese enterprises, including state-owned, joint-stock and private companies, have been making profits in recent years, nearly half of all foreign-invested businesses have been losing money. Yet while so many foreign enterprises claim to be losing money, China witnesses a continual rise in its foreign direct investment (FDI). [Full Text]

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