FDI in China: An Asian Perspective

Yasheng Huang

ene 1998 · ISEAS series on China and the Asia-Pacific Libro 1 · Institute of Southeast Asian Studies

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China is the largest recipient of foreign direct investment (FDI) among developing countries. This study compares China's FDI performance with a number of other Asian countries and focuses on the policy and institutional factors that lead to a large demand for FDI in China. The policy and institutional factors include import substitution, excess investment demand and features of China's FDI regulatory system. The study shows that there are costs associated with such a high demand for FDI, including overbidding for FDI and the associated loss of Chinese bargaining power, large import demand, and the structure of the FDI at variance with Chinese official policies. This study also briefly discusses the foreign economic policy implications of China's FDI absorption and suggests some future research possibilities.

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Yasheng Huang is an Associate Professor at Harvard Business School. He has published Inflation and Investment Controls in China: The Political Economy of Central-Local Relations during the Reform Era (New York: Cambridge University Press, 1996)