Wednesday, 31 March 2010

OECD Investment Policy Reviews of China

Check out the three investment policy reviews of China published by the OECD.

The first one, published in 2002, is general, covering many different aspects of policies to encourage investment. An overview of the whole book is provided in Chapter 1, which you can download as a PDF file.

The next one, which came out in 2006, focuses on the Chinese government's policies on cross-border mergers and acquisitions (M&A).

The most recent was published in 2008. This provides an update on laws and policies since 2006, then looks for the first time at China's policies on outward direct investment, as the basis for examining what the Chinese government is doing to improve the conduct of companies in China and Chinese companies investing overseas, largely in response to the government call to them to "go out" (走出去).

If you read Chinese, you can download a copy of this latest Review in Chinese as a single PDF file.

FDI's roller coaster ride

Economic statistics for the individual months of January and February are practically useless for making statements about trends based on year-on-year comparisons in China.

This is because the Chinese lunar calendar has thirteen months and so the New Year can fall in January or February. In 2009 the first day of the Chinese New Year was on 26 January, while in 2010 it fell on 14 February.

Since the New Year spring festival holiday, now a “golden week”, is China’s most important traditional holiday, involving millions of people taking time off work to return to their home towns and villages, national output is lower in the month in which it falls.

So in January 2010 most economic statistics were bound to show marked rises and in February 2010 they were destined to show similarly strong slowdowns or falls, almost regardless of boom or recession.

In 2011, when Chinese New Year is again in February, this effect will be less marked. This will not recur, though, until 2019.