FDI in China Essay by Elkford

FDI in China
Examines the effect of foreign direct investment on China's economy.
# 63152 | 2,854 words | 9 sources | MLA | 2005 | CA

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This paper argues that one of the major reasons for China's incredible growth since its opening in 1978, is due to the substantial influx of foreign direct investment (FDI). The gradual opening up of China to FDI, coupled with a large array of benefiting economic factors such as preferential policies, low labor costs, access to neighboring markets with similar culture/language etc., has resulted in unimagined investment and resulting growth. The paper shows that in this process FDI, has positively improved and/or contributed to total investment, technology transfer, employment, foreign exchange reserves, management know-how, competition, new industries and tax revenue.
The paper includes a chart.

Table of Contents:
I. Introduction
II. Overview of FDI Trends
Sources of FDI
Geographical Distribution
Reasons for Investment and Preference for Investment on the Coast Business Forms of FDI
Government Policies
WTO Agreement and FDI
Empirical Studies
III. FDI Challenges and China
1 Impact on Domestic Capabilities
2 Foreign Exchange
3 Employment
4 The Limits of Preferential Policies and Tax Evasion?
5 Financial Market Inefficiencies
IV. A Case Study of FDI in Dongguan, Guangdong
V. Conclusion

From the Paper:

"In all these cases, the liberalization process was carefully developed by only allowing access to certain sectors and geographical areas. Today there are still limitations of foreign investment in which the Government deems such sectors as "strategically" important. Such sectors or projects include airport development, nuclear power plants, oil and gas, subways, communications, printing etc. In many cases foreign investment is restricted to an equity share that is less than 50% (Tseng and Zebregs, 2002)."

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