Abstract
Since the opening of China’s economy in the early 1980s, anything conducive to economic development has been allowed and foreign input has been encouraged. Japan has provided China with a tremendous amount of official development assistance (ODA), massive private loans, and numerous grassroots technical aids, but what has stimulated China’s economic development most seems to be trade and foreign direct investment (FDI). This chapter focuses on the relationship between Japanese investment in China and China’s economic development, as well as prospects for future SinoJapanese FDI relations. The chapter is organized as follows: in the next section I briefly describe the recent trends of Japan’s direct investment in China. The relationship between FDI and economic growth in China is then analysed, making own estimates of its FDI functions. The focus is then turned on Japan’s direct investment in China, its nature, and its effects on growth of the Chinese economy. The final section forecasts possible Sino-Japanese FDI relations in the years to come.
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