Determinants of Fdi in China

Abstract

Foreign direct investment (FDI) is a direct investment into production or business in a country by a company in another country, either by buying a company in the target country or by expanding operations of an existing business in that country .China has become the second largest FDI recipient in the world, after the United States, and the largest host country among developing countries. Foreign direct investment (FDI) can play an important role in achieving rapid economic growth in developing countries. Developing countries have not been considered as favourable destinations for FDI as developed countries. Moreover, among the developing countries a few, such as China, India, Nigeria and Sudan, are the major recipients of FDI, with the rest vying for the scraps. This paper covers the FDI figures of China and how does FDI affect China and also the main determinants of FDI in China like size and growth of the Chinese economy and prospects, Natural and human resource endowments – cost and productivity of labour and Physical, financial and technological infrastructure.