China and foreign direct investments: policies and strategies

Résumé du document

China experimented 25 years of soviet dogma leading to its isolation from global trade. The turn-around initiated in 1978, along the strategies of four modernisations, introduces a set of policies to attract FDI, but also to control, monitor, and manage them. FDI has been used as a vehicle of economic, social and technologic development by China's government that in a gradual and incremental evolution of its policies open progressively to world trade. Various tools and directives at government level have been put forth to attract and take the most foreign capital, with the resulting success symbolised by its accession to WTO in 2001, and statistically approved since China is the first destination of FDI since 2003. Moreover, the most impressive move is that China has been keen at dragging and using FDI to be currently the third world economy's successfully integrated global trade system. The purpose of this report is to analyze the set of policies put forth in an effort for strategic development of the People Republic of China.

Extraits

[...] IPRs and sets of policies have been designed to this purpose. The spill-over versus crowd-out effects are now much more fairly balanced enabling a trade relationship. China is now the first FDI destination, and fully integrated into world trade, even behaving as a foreign investor worldwide. Its strategic and gradual open policies on FDI enabled China to attract and manage foreign investment very successfully. BIBLIOGRAPHY Cai B. H. (1987) Open to the Outside Shanghai Renmin, Shanghai. Cheung K. et P. [...]

[...] Traditionally FDI flow to locations that are macro economically stable and reforming, and seeks favourable environment such as high productivity, low production costs, high quality infrastructure for production purposes, and also a sophisticated domestic demand for business expansion. China has proved to successfully allocate its resources and create an attracting environment for FDI, thanks to its well thought set of policies and incremental strategies. The main determinants encouraging FDI to flow in China are: Low production factors and skilled workers. China holds a mass of workers. The lax legislation and the low labour cost attract FDI in labour intensive industries. More recently, foreign investors taped into local talents and create clusters with university for technology development. [...]

[...] By its size dimensions, it is the world first market. Furthermore, the increasing living standards and the westernisation of the consumers offer infinite opportunity for foreign companies. According to the US-China Business Council survey (2003) of foreign MNCs move into China with commercial intents The Banking system constraints Because of the lack of development of an efficient banking system fully controlled by national bodies, and the regulation constraints to access financial resources, domestic companies were calling for international investors. The opportunity to access foreign capital during the privatisation move enables and implicitly encourages domestic firms to let FDI flows in their equity structure. [...]

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