The Role of FDI in China's Economic Development

Attracting foreign direct investment (FDI) is a major component of the policy of opening up China’s economy to trade and investment that was initiated in the late 1970s. FDI inflows have increased rapidly over the past quarter of a century. These inflows are largely concentrated in Eastern China, particularly in Guangdong province. FDI has played an important role in China’s economy, for example by stimulating trade growth and promoting productivity improvements in the domestic economy. Hong Kong remains the largest source of FDI. Measured by the size of its population and other objective factors, China’s potential for attracting more FDI from OECD countries remains underexploited...