Abstract
Investors prefer to invest in assets and places that offer attractive returns and are relatively less risky. China is one of the countries with the highest economic growth and is trying to attract investors from all corners of the world to invest and participate in the growth of China. The main objectives of this study are to evaluate the position of China as a destination for FDI, the factors that attract FDI into China, and the factors that hinder the flow of FDI into China. It also proposes to examine whether the attractiveness of China is increasing or is it on the decline and the rationale behind it. This study is based on secondary data, covers a period of five years, and analysis various determinants of FDI. The study reveals that China has the potential, political stability, and an organized financial system, but its market has started to shrink as the population growth is declining, the labor cost is increasing, labor market efficiency is decreasing, economic growth and infrastructure developments are decelerating, and corporate and individual tax rates are high.
Highlights
In today’s world, there is a great flow of investments between countries, investments flowing to destinations that are relatively more attractive than others
The main objectives of this study are to find out the status of China as a destination for Foreign Direct Investment (FDI); the factors that attract FDI into China and how these can be sustained, and the factors that hinder the flow of FDI into China and how these can be reduced
For investors seeking alternative destinations to diversify their manufacturing and supply chains, India has emerged as an alternative hub for global manufacturing, with low labor costs, incentives and regulatory relaxations for manufacturing, and a reduced corporate tax rate, investor-friendly land and labor laws. It is highly appreciable for a country that emerged from abject poverty and isolation more than 40 years ago, to become one of the fastest-growing economies of the world
Summary
In today’s world, there is a great flow of investments between countries, investments flowing to destinations that are relatively more attractive than others. The investors be it individuals, corporates, or nations will always prefer to invest in assets that give attractive returns and are relatively less risky. Foreign Direct Investment (FDI) is the investments made by a company in the investor country into a foreign, host country. It can be in the form of acquisition of an already existing host firm or establishment of new companies in the host country or entering into a joint venture with an existing host firm. The importance of FDI is growing because of the beneficial impact on both the host country’s economy and a firm’s performance and profitability
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