Recent Developments in Foreign Direct Investment in China

Chunlai Chen

No 1996-03, Chinese Economies Research Centre (CERC) Working Papers from University of Adelaide, Chinese Economies Research Centre

Abstract: Since 1993 China has become the second largest FDI recipient in the world and the single largest host country among the developing countries. This paper finds that the regional distribution of FDI inflows into China has been very uneven and mainly concentrated in the East region. Among the economic sectors, industry and real estate sectors are the major FDI recipients. FDI inflows into China are mainly concentrated in labour intensive manufacturing industries, which reveals that taking advantage of ChinaÂ’s cheap labour is the main motive for foreign investors in China. FDI inflows into China have been dominated by NIEs, especially by Hong Kong. This paper discusses several factors for the domination of NIEsÂ’ investments in China and reviews the recent policy and regulation changes towards FDI.

Date: 1996
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