The liberalisation of FDI policies and the impacts of FDI on China’s economic development

Abstract

Foreign direct investment (FDI) has been one of the most significant features of China's economic reform and opening up to the outside world. By the end of 2016, China had attracted a total of US$1.35 trillion in FDI stock (UNCTAD various issues), making it the largest FDI recipient in the developing world. The large volumes of FDI inflows have contributed greatly to China's economy in terms of capital formation, employment creation, export expansion and technology transfer, and have exerted significant impacts on its economic growth and structural changes. This chapter provides a brief review of the liberalisation and development of China's FDI policies since late 1978, discusses the main characteristics of FDI in China, examines the main impacts of FDI on China's economy and provides some policy suggestions for China to further attract and benefit from FDI.