Foreign investment fraud

Government officials in Huaian, Jiangsu province in Mainland China have faked foreign investment inflow levels in order to reach gross domestic product (GDP) goals set by the Chinese central government, newspaper South China Morning Post (SCMP) has reported.
Officials in 31 local governments in Huaian were found to have used taxpayer money to bribe fake foreign investors and middlemen to inflate foreign direct investment inflows, the Hong Kong newspaper reported, citing Thepaper.cn and the Southern Metropolis News. Local government officials used RMB85 million (MOP101.7 million/US$12.7 million) to pay intermediaries in order to reach a target set in 2010 by the city authorities to attain US$1 billion (US$7.9 billion) in foreign investment.
Shell companies funded by fake foreign investments were allegedly created with the identification cards of Hong Kong or Macau residents, and their funds were transferred to fake foreign investment bank accounts, only to be returned one to three days after being registered as outside investment, the newspaper reported.
According to the SCMP, Huaian had the third-lowest gross domestic product of Jiangsu’s 13 prefecture-level cities, yet saw some of the largest growth in foreign investment in the province in the three years from 2009.
Levels of foreign investment growth are considered crucial in evaluating government officials’ performance by the Chinese central government, with foreign investment growth in Mainland China having decreased three per cent year-on-year in the first six months of 2016, the publication reports.