FDI in China
Critically discuss the reasons why China has attracted such huge amounts of foreign direct investment (FDI) over the last 30 years. Carefully evaluate the alternative investment patterns that are emerging to challenge this.
Foreign direct investment is when companies or individuals from one country invest directly to a company based in a different country.1 China was for many years the country attracting the largest amounts of FDI, amongst developing countries but according to Forbes2 in 2012 it surpassed the United States to become the country attracting more FDI than any other country in the world. This essay will look into the reasons that China has attracted such large amounts of foreign direct investment within the last 30 years. Finally in this essay the alternative investment patterns that are emerging will be evaluated. The main reasons that China has attracted such amounts of foreign direct investment are: China’s openness to international trade, infrastructure including transportation and technology, resource availability in both labour and materials, as well as efforts by the Chinese Government to attract and promote FDI. Many countries are predicted to attract large amounts of FDI within the next years including the N11 (next eleven) while also totally different markets compete for investments and challenge the rise of China’s foreign direct investment attraction. Firstly, the reasons that China attracts FDI will be analysed and finally alternative investment patterns that challenge China’s attraction to foreign direct investment will be evaluated in the essay.
China’ openness to international trade and willingness to reduce tariffs has had a vital role in the rise of FDI attraction to the country. Governments of China foresaw the opportunities that could arise for the country’s economy and exploited the demand for foreign direct investment to the country by becoming more export-friendly. China has reduced significantly the tariff barriers in the
Foreign direct investment is when companies or individuals from one country invest directly to a company based in a different country.1 China was for many years the country attracting the largest amounts of FDI, amongst developing countries but according to Forbes2 in 2012 it surpassed the United States to become the country attracting more FDI than any other country in the world. This essay will look into the reasons that China has attracted such large amounts of foreign direct investment within the last 30 years. Finally in this essay the alternative investment patterns that are emerging will be evaluated. The main reasons that China has attracted such amounts of foreign direct investment are: China’s openness to international trade, infrastructure including transportation and technology, resource availability in both labour and materials, as well as efforts by the Chinese Government to attract and promote FDI. Many countries are predicted to attract large amounts of FDI within the next years including the N11 (next eleven) while also totally different markets compete for investments and challenge the rise of China’s foreign direct investment attraction. Firstly, the reasons that China attracts FDI will be analysed and finally alternative investment patterns that challenge China’s attraction to foreign direct investment will be evaluated in the essay.
China’ openness to international trade and willingness to reduce tariffs has had a vital role in the rise of FDI attraction to the country. Governments of China foresaw the opportunities that could arise for the country’s economy and exploited the demand for foreign direct investment to the country by becoming more export-friendly. China has reduced significantly the tariff barriers in the