Foreign Direct Investment in China: Some Lessons for Other Countries

Harm Zebregs and Wanda Tseng

No 2002/003, IMF Policy Discussion Papers from International Monetary Fund

Abstract: China's increasing openness to foreign direct investment (FDI) has contributed importantly to its exceptional growth performance. This paper examines China's experience with FDI and identifies some lessons for other countries. Most of the factors explaining China's success have also been important in attracting FDI to other countries: market size, labor costs, quality of infrastructure, and government policies. FDI has contributed to higher investment and productivity growth, and has created jobs and a dynamic export sector. China's success, however, did not come without some pitfalls: an increasingly complex tax incentive system and growing regional income disparities. Accession to the WTO should broaden China's "opening up" policies and continue FDI's contributions to China's economy in the future.

Keywords: PDP; FDI inflow; FDI flow; FDI regime; FDI policy; further FDI liberalization; China; Foreign Direct Investment; FDI pattern; implementing rule; Income tax systems; Tax incentives; Infrastructure; Legal support in revenue administration; Europe (search for similar items in EconPapers)
Pages: 26
Date: 2002-02-01
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Citations: View citations in EconPapers (61)

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