The Internationalisation of China and Its Implications for Australia

Bijit Bora and Chunlai Chen

No 1997-05, Chinese Economies Research Centre (CERC) Working Papers from University of Adelaide, Chinese Economies Research Centre

Abstract: This paper examines the process and extent of China's commercial integration into the global economy through its trade and investment links. China's emergence as an economic entity appears to have been a result of combination of 'push' factors in capital rich economies such as the NIEs and 'pull' factors such as trade and investment liberalisation in China. This study showed that while the initial response by firms to the prospect of doing business in China was lukewarm, after a period of time to gauge the government response to investment, FDI has flowed into China at an extraordinary pace. The corporate response to a more open China is beginning to evolve from an initial entry strategy of establishing foreign affiliates to capitalise on cheap labour to market access investments, reflecting a maturing relationship. The study showed that there is scope for countries such as Australia to capitalise on these developments. However, in order to sustain the growth and momentum of FDI into China from Australia and other countries the Chinese government will have to continue to respond favourably to business by further liberalising its trade and investment regimes.

Date: 1997
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