FDI into China

FDI into China

The Limited Potential of China’s Western Region “Foreign Direct Investment in China is expected to reach US$100 billion in every year of the 11th Five-Year Plan period (2006-10)” (Annual 1). If history is any indication of the future, then China can expect biased distribution of these funds during the 11th Five-Year Plan. Attracting foreign direct investment is not an easy task. The region must possess a demanding consumer market, a developed infrastructure, and access to international markets. From 1983 to 2001 an estimated US$400 billion worth of FDI flowed into China. More specifically, “the eastern coastal region accounted for 88% of China’s total inflows of FDI, but the central region attracted just 9% and the western region little more than 3%”(Ogutcu 13). The Chinese government is not ignoring this problem. The government has in fact devised the “Western Development Strategy” (Xibu Da Kaifa), which it officially launched in January 2000; however, disparities still remain and will continue to remain until the western region can become more attractive to exorbitant inflows of foreign direct investment. Although foreign direct investment into China has provided rapid growth and prosperity along the coastal region, China’s western region will not see the same growth and foreign direct investment in future years. Foreign Direct Investment in the Eastern Coastal Region If a host country has a vast market size, an efficient infrastructure, and access to international markets, then it is a prime candidate for foreign direct investment. Above all, foreign investors have to consider the potential demand in their chosen local market. Without question, China has the most attractive emerging consumer market in the world. If one looks at a population density map (See figure 1 in Appendix) of China, one would see an obvious concentration of people alone the coast. China boasts an estimated population of 1.2 bil…


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