The Evolution and Main Features of China's Foreign Direct Investment Policies

Chunlai Chen

No 1997-15, Chinese Economies Research Centre (CERC) Working Papers from University of Adelaide, Chinese Economies Research Centre

Abstract: This paper examines the evolution and the main features of China's inward foreign direct investment policies implemented since 1979. The paper reveals that in all the policy aspects relating to FDI China has taken a positive but gradual reform approach. This has been demonstrated by the gradual shifts from the establishment of the four SEZs to the nationwide implementation of open policies for FDI, from granting permission for joint ventures to allowing wholly foreign owned enterprises, from tight foreign exchange control to RMB convertibility on current account and from offering tax incentives to attract FDI to the application of national treatment. Despite the limitations, this reform process has proved both politically necessary and empirically successful. The gradual changes to China's FDI policies clearly indicate that China has continued to express a strong desire to stimulate and guide its economic development through promoting a more liberalised legal and policy environment to attract FDI and through further pursuing economic reform to establish a more market-oriented economy.

Date: 1997
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