China fudged FDI nos: Unctad

China claims FDI of $5.42 bn from US in 2002 while US says $924 mn, a variation of 83%.

Adding a new twist to the debate over China's awesome FDI figures, a recent Unctad report has said the numbers claimed by the country are far in excess of those reported by investors.

China claims that it got FDI worth $5.42 billion from the US in 2002. But the US says it has invested a meagre $924 million during the period, Unctad's World Investment Report 2005, says.

The discrepancy is visible in case of other investors as well. China says Hong Kong invested $17.86 billion in 2002. But Hong Kong says the amount is $15.93 billion. Again, Chinese data show that Japan pumped in $4.19 billion during the year, while Japan claims it invested $2.60 billion a discrepancy of 38 per cent.

Interestingly, an OECD report titled "China: Progress and Policy review" points out that FDI flow into China from OECD countries during 1995-2000 was $39.3 billion, while the Chinese commerce ministry shows $77 billion.

The OECD report states, "MOFCOM (ministry of commerce of the People's Republic of China) FDI statistics are not based on the internationally recognised standards that are generally applied by OECD countries. Consequently, the differences in the statistics compiled by OECD countries on their investment in China and the statistics published by MOFCOM on OECD members investment in China show serious inconsistencies between these sources."

Citing the instance of China from 2000-2002 with respect to France, Germany, Hong Kong (China), Japan, the US and the UK, the Unctad report points out that bilateral discrepancies between FDI flows reported by home and host countries can be quite large.

The report says many countries still deviate one way or another from recommendations of the International Monetary Fund and the Organisation of Economic Cooperation and Development in their collection, definition and reporting of FDI data.

The discrepancies have arisen because of different data-collection methods used by host and home countries, different time periods used for recording FDI transactions, different treatment of round-trip investments and of FDI in special-purpose entities.