OECD Investment Policy Reviews: China 2003
Progress and Reform Challenges

China has become one of the world's leading destinations for foreign direct investment (FDI) since the Chinese government opted to reform the economy and open it to foreign trade and investment. Inflows of FDI, which accelerated at the time of China's accession to the WTO in 2001, have been an important factor in promoting rapid economic growth and technological progress. However, there remains substantial potential for a greater inflow of long-term, high-technology, high-value-added FDI from OECD countries.
This study records and evaluates the development so far of an enabling environment for FDI and suggests policy options designed to improve it further. Foreign investors were initially attracted to China by cheap land and labour, the promise of a large market and, to some extent, by fiscal incentives. To sustain and increase large-scale FDI inflows, it is now necessary to move towards a more strongly rules-based attraction strategy, based on structural elements which will include a sound legal system, transparent laws and regulations, streamlined investment approval procedures, good corporate governance, effective competition policy and a sound financial system.
Also available in: French
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Bilateral Investment Treaties
China has signed bilateral investment treaties (BITs) with more than 100 countries. These mostly adopt the so-called European BIT model based on the 1967 OECD Draft Convention on the Protection of Foreign Property whose provisions apply only to investment and investors after establishment...
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