Abstract
The open-door policy adopted in China, through its preferential treatments that consistently favour south-east coastal provinces, has resulted in the geographic concentration of foreign trade and investment. This paper provides evidence at both the aggregate and disaggregate levels that the south-east coast of China experienced much higher rates of industrial growth during 1985-98, indicating a geographic shift in industry towards this region. Empirical results using provincial-level data show a clear positive link between inward foreign direct investment (FDI) and regional industrial growth, especially after 1991 when the volume of FDI took off. This implies a significant impact of China's foreign trade and investment reforms on industry location.
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