Foreign Direct Investment in China

Foreign Direct Investment in China

Location Determinants, Investor Differences and Economic Impacts

Chunlai Chen

Foreign Direct Investment in China is one of the most comprehensive studies of FDI in China and provides a remarkable background of information on the evolution of China’s FDI policies over the last 30 years.

Chapter 11: Conclusion, Policy Implications and Prospects

Chunlai Chen

Subjects: asian studies, asian economics, economics and finance, asian economics, international economics, political economy, politics and public policy, political economy

Extract

Foreign direct investment in China provides a valuable opportunity for both the theoretical study and empirical analysis of the issues involved when such investment occurs. This study, with respect to the main issues raised in Chapter 1, has analysed the location determinants, the investor differences and the economic impacts of FDI in China over the past three decades. The results obtained from this study have provided us with much insight into the general issues of FDI in developing countries. In particular, this study has extended our knowledge in three main ways: (1) greater understanding of the general causes of FDI from the aspect of the ‘demand-side’ factors by focusing on investigating the location determinants affecting inter-country and inter-province distributions of FDI; (2) better knowledge of the differences between the developing source countries and economies and the developed source countries in their investment relationships with China, and the distinctive features of the investments from the overseas Chinese investors as compared to those from the foreign country investors; and (3) further evidence of the impact of FDI on economic growth, the spillover effects of FDI on productivity, and exports of domestic firms in the case of FDI in China. This chapter summarizes the study, links the main findings of the different chapters, presents policy implications and discusses the prospects for FDI inflows into China. SUMMARY OF THE STUDY How has China changed from totally prohibiting FDI to becoming the largest FDI recipient among developing countries within a period of three decades? To...

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