ABSTRACT
Financing of investment in China at first sight appears to be a relatively straightforward process centered on the state budget. This chapter looks at the main sources of investment funds and aims to evaluate some of the means by which savings are transformed into investment expenditures and considers evidence on the efficiency of investment in China. A widespread mode of transforming savings into investments, especially if its scope is broadened to include investments made in subordinate factories by industrial bureaus and local authorities, is self financing. Direct investments are made in bodies variously termed "joint ventures," "joint operations," "jointstock companies," etc. The investors share in the profits according to the value of their investments. China's banks can take part of the credit for any improvements in the efficiency of investment, but at the same time they bear some of the responsibility for any deterioration in the efficiency of investment that may have occurred.
