Foreign direct investment in China
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Foreign direct investment in China
Trends and characterstcs after WTo accesson
Chunlai Chen
Foregn drect nvestment (Fdi) n chna has been one of the most sgnficant features of the country’s economc reform and openng up to the outsde world. The gradual lberalsaton of restrctons on Fdi snce 1979 and the government’s commtment to further openng up have greatly mproved the nvestment envronment. Foregn firms have been attracted by the huge domestc market and pool of relatvely well-educated, low-cost labour, whch has made chna one of the most attractve destnatons for Fdi n the world. chna became a member of the World Trade organzaton (WTo) n december 2001, after 15 years of negotatons n whch chna agreed to reduce tarff and non-tarff barrers to trade n agrculture and manufactured goods, to lberalse and open trade n servces to foregn partcpaton, remove restrctons on Fdi—partcularly n servces—and mprove protecton of ntellectual property rghts. in terms of Fdi, chna has made substantal commtments n nvestment lberalsaton, especally n the servces sector, and has agreed to comprehensvely mplement the Trade-related investment measures (Trims) agreement. Undoubtedly, the reducton n foregn nvestment barrers and the lberalsaton of the Fdi regme wll provde great opportuntes for foregn nvestors to operate n chna. There have been many studes on the mpact of chna’s entry nto the WTo on Fdi nflows nto the country (for example, mckbbn and Wlcoxen 1998; hu 1999; Walmsley and hertel 2000; UNcTAd 2000; chen 2002). The most common findngs are that chna’s WTo accesson wll have a postve mpact on ts gross domestc product (GdP) growth—manly through efficency gans resultng
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China—Linking Markets for Growth
from trade and nvestment lberalsaton—and t wll accelerate Fdi nflows nto chna and ncrease the share of...