Title: Foreign Direct Investment in China: Policy, Trend and Impact
Reference Number: 1049
Publication Date: June 2002
JEL Classifcation: F2, O2

K.C. Fung
University of California, Santa Cruz

Hitomi Iizaka
University of California, Santa Cruz

Sarah Tong
HK Institute of Economics and Business Strategy


The paper provides a comprehensive overview of the policies and development of foreign direct investment during China's economic reform in the past two decades. Deng's opening-up policy initiated in the late 1970s attracted large and growing amount of foreign investment, first from neighboring economies and in recent years increasingly from western industrial countries. Foreign investment has played crucial role in China's foreign trade as well as domestic industrial restructuring. Foreign investors provide China with much needed finance, especially during the early years of the reform. More importantly, foreign businesses bring with them technology, managerial skills, and international marketing experiences. Today, foreign businesses are important elements in China's economy. With the accession to the WTO, China has become the one of the most attractive designation for cross-border investment.


Published in Global Economic Review 33:2 (2004), pp. 99-130.

Key words: International investment, multinational firms; trade policy, factor movement

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Last modified: 01/17/2008