Tax incentives and foreign direct investment in China

Minchung Hsu, Junsang Lee, Roberto Leon-Gonzalez and and Yanqing Zhao

Applied Economics Letters, 2019, vol. 26, issue 9, 777-780

Abstract: The preferential tax policies for foreign direct investment (FDI) in China were terminated by a tax reform in 2008. This article uses the provincial-level panel data for 1998‒2008 before the reform in order to study whether the tax incentive had been a significant determinant of foreign investment decisions. We find that market size and geographic location had significant impacts on the FDI inflow into China but the tax incentive policies were not a sufficient determinant of FDI inflow into China over the periods studied, which provides a rationale for the termination of the tax incentives in FDI at 2008 reform in China.

Date: 2019
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DOI: 10.1080/13504851.2018.1495817

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