china and foreign direct investment

Topics: Investment, Foreign direct investment, Macroeconomics Pages: 3 (724 words) Published: January 31, 2014

What is the general climate in the country toward FDI?
China engrossed USD 124 billion in foreign direct investment (FDI) in 2011, second only to the United States. China's high economic growth rate and the expansion of its domestic market help explain its optimism as an FDI destination; but foreign investors have concerns regarding potential investment returns with uncertainty about China's willingness to offer a level playing field to domestic competitors. China has a legal and regulatory framework that provides the government with discretion to promote investment in specific regions. China is also known to restrict foreign investments that are not in its nations best interest, this includes turning away investments that compete with its local monopolies or other favored domestic firms. Foreign investors report many regulations that are inconsistent. Also, foreign investors report a range of challenges related to China's current investment climate, including industrial policies that protect and promote state-owned and other domestic firms, equity caps and other restrictions on foreign ownership in many industries, weak intellectual property rights protection, a lack of transparency, corruption, and an unreliable legal system. -Domestic firms, Restrictions on Foreign Ownership and Transparency Difficulties: As far as the Chinese government is concerned they welcome foreign investments. China seeks to promote investment in higher value-added sectors this includes high technology research and development, advanced manufacturing, clean energy technology, and select modern services sectors. Export-oriented investments also often receive government support. A major goal of China's investment policies is to encourage the domestic development of technological innovation. The country deters foreign investments in sectors: 1) where China pursues to grow domestic firms into worldwide competitive multinational corporations; 2) that have promoted...
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Foreign Direct Investment in China Essay
  • Foreign Direct Investment Essay
  • Foreign Direct Investment in Nigeria Essay
  • Economics: Foreign Direct Investment Essay
  • Foreign Direct Investment Essay
  • Foreign Direct Investment in Nepal Essay
  • Foreign Direct Investment by Cemex Essay
  • Foreign Direct Investment Essay

Become a StudyMode Member

Sign Up - It's Free