Foreign Direct Investment in China

Foreign Direct Investment in China

Foreign Direct Investment in China

Foreign Direct Investment in China


Although the events of Tiananmen Square in 1989 brought both foreign trade and investment to a virtual standstill in the People's Republic of China, new investment is now again flowing into the country, but at a guarded pace. For those wishing to pursue the numerous opportunities that still exist, this volume offers a full analysis of the risks involved, a thorough treatment of the different forms of investment activities in China, complete coverage of China's investment policies and incentives, and specific case studies of foreign direct investment in China.


The sleeping dragon that awakened in 1979, when China opened its doors for Western trade and investment, has moved forward at a cautious pace, sometimes backstepping and sometimes sidestepping, in its path toward achieving modernization of its economy. Inflows of capital, technology, and management through foreign direct investment by joint ventures and wholly foreign-owned enterprises have contributed significantly to China's development in the past eleven years. In spite of many obstacles, managers of these enterprises have been successful in transferring skills and technologies that have enhanced the pace of modernization. In so doing, production quality has been upgraded, new markets opened, and foreign exchange earned. However, progress has not been as rapid, nor has the outcome been as successful, as either the foreign investors or Chinese officials had hoped.

The future success or failure of China's modernization efforts rests with the present leadership. Decisions as to whether China moves forward with the open-door policy and accompanying reforms, or whether it reverts back to a highly planned system that ignores the role of market forces, will be crucial to China's overall development in the 1990s and beyond. In short, these decisions will determine whether or not China will be competitive in the world economy by the year 2000 or will have regressed to the roll of a bystander as other nations advance.

What China needs are informed and forward-looking leaders who will put personal gains and politics aside and chart a course of action that will streamline the economy and inspire the support of the nation. As the Chinese philosopher Lao-Tse, in 565 B.C., wrote:

A leader is best when people barely know he exists. Not so good when people obey and acclaim him . . .

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