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Foreign Direct Investment


After 1979 when the restriction of foreign direct investment into China was lifted,
the entrances of foreign direct investment into China have augmented very fast.
At the beginning the entrances of these investments were in conjunction with
local enterprises in the hotel, building and power industries. As many other
Subsequent to 1992 the number of investments improve when Chinese locals
and central governments decided to create a new foreign investment law was
adopted in order to increase the FDI with new openness policies (Walley & Xin
2006). Is important to mention that China as many Asian countries have the
necessity to create new jobs because of the increasing population. Asia
Development Bank (cited in Karlsson, Lundin, Sjoholm & He 2009) advises that is
imperative to generate 750 million employments for the next ten years if these
countries decided to continue with the actual rate of growing and decreasing the
poverty rate. Therefore, foreign direct investments and multinationals possibly
will take part as vital function in that requirement, implementing their
information of markets, machinery and supply channels (Karlsson, Lundin,
Sjoholm & He 2009). In fact, 44.109 latest foreign investments enterprises that
have come to China have create 25 million jobs for locals (Liu, Yu, Gao & Wang

Government rules and regulations concerning FDI

Nowadays China is not outside of the worldwide tendency, even until exist the
government conventional formation of sovereignty, China supports the trail of
trust in the development of trade and foreign investment (Thun, 2006). The best
example of this is the Chinese membership in the WTO. In addition, “China will
exempt the import duty, taxes VAT Tax and consumption tax for equipment and
products used for qualified foreign invested R & D centers by the end of 2010”
(China chemical reporter, 2010).

Economic Zones

The biggest amount of FDI in China is ubicated in the eastern provinces, then in
middle provinces and in the lower quantity in western places (Liu, Yu, Gao &
Wang 2008). The reason for this is because to the fact that eastern providences
offers better transportation system, quality of education and infrastructure.
Walley & Xin, 2006, ‘China’s FDI and non-FDI economies and the sustainability of
future high Chinese growth’, China Economic Review, vol. 21, no. 1, pp. 123-135,
retrieved 7 August 2010, Business Source Complete.

Karlsson, Lundin, Sjoholm & He 2009, ‘Foreign Firms and Chinese Employment’,
World Economy, vol. 32, no. 1, pp. 178-201,retrieved 7 August 2010, Business
Source Complete.

Liu, Yu, Gao & Wang 2008, ‘More Effective Utilization of FDI in China’, China-USA
Business Review, vol. 7, no. 6, pp. 13-30, retrieved 8 August 2010, Business
Source Complete.

China Chemical Reporter, 2010, ‘China’s Economy Recovery Inflation Caution’,

China Chemical Reporter, vol. 21, no. 9, pp 5,retieved 8 August 2010, Academic
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