What are the impacts of inward foreign direct investment on China?

Abstract

Under the trend of economic globalization, labor, capital and other resources flow in and out of countries continually due to fewer and fewer barriers. In this way, multinational enterprises have become one of the most influential part of economies. Inevitably, multinational enterprises’ global activities result in a more intense foreign direct investment (FDI). China has been a major receiver of FDI for a long time, and the trend of IFDI to China is still on the rise in the mass. Therefore, the number of researches on FDI to China increases considerably year by year. Focusing on economic, environmental and regulatory aspects, this paper aims to explore IFDI’s impacts on China. The results indicated that IFDI indeed brings numerous benefits to China while it aggravates imbalanced developments in China and causes some environmental problems. On the whole, the advantages brought by IFDI outweigh its disadvantages as long as the Chinese government keeps IFDI’s environment pollution under control. Consequently, how to attract high-quality foreign direct investment and improve foreign investment efficiency become urgent problems for the Chinese government. This paper also suggests that the Chinese government can’t take in IFDI passively, it should call for actions to minimize IFDI’s negative impacts, too.