IDEAS home Printed from https://ideas.repec.org/a/bas/econst/y2009i1p214-223.html

On Some Characteristics of Foreign Direct Investment in China

Author

Listed:
  • András Székely-Doby

Abstract

In this paper we analyze foreign direct investment (FDI) in China from several points of view. After putting the subject into an historical context, we use time series to illustrate the main trends of capital inflows. Our main finding is that the significant growth of FDI inflows since the beginning of the 1990s can be attributed to two factors: first, the strengthening trust in the irreversibility of the reform process, second, the gradually opening domestic market. The paper also deals with two specific, and very important issues: the so called round-tripping capital, and role of off-shore areas in FDI inflows. We show that these phenomena are strongly linked to each other, and based upon the different handling of domestic and foreign enterprises by the government. Another special feature we try to understand is the large volume of FDI compared to portfolio investments. According to our explanation this is a consequence of the relative backwardness of the Chinese financial system compared to that of in advanced economies, which makes FDI a much safer way of financing than the use of the underdeveloped Chinese capital markets.

Suggested Citation

  • András Székely-Doby, 2009. "On Some Characteristics of Foreign Direct Investment in China," Economic Studies journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 1, pages 214-223.
    • Handle: RePEc:bas:econst:y:2009:i:1:p:214-223
    as

    Download full text from publisher

    File URL: http://www.ceeol.com/aspx/issuedetails.aspx?issueid=e7b4884b-e874-42fe-8103-6743cc5001f2&articleid=95b39e68-ee3d-49fb-8f11-793cda01b943#a95b39e68-ee3d-49fb-8f11-793cda01b943
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Barry Naughton, 2007. "The Chinese Economy: Transitions and Growth," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262640643, December.
    2. Gunter, Frank R., 2004. "Capital flight from China: 1984-2001," China Economic Review, Elsevier, vol. 15(1), pages 63-85, January.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Eswar Prasad & Shang-Jin Wei, 2007. "The Chinese Approach to Capital Inflows: Patterns and Possible Explanations," NBER Chapters, in: Capital Controls and Capital Flows in Emerging Economies: Policies, Practices, and Consequences, pages 421-480, National Bureau of Economic Research, Inc.
    2. Feng, Qu & Wu, Guiying Laura, 2018. "On the reverse causality between output and infrastructure: The case of China," Economic Modelling, Elsevier, vol. 74(C), pages 97-104.
    3. Abasov, Muzaffar, 2017. "Comparison of Chinese reform experience with other transition economies (in the example of Russia)," MPRA Paper 79841, University Library of Munich, Germany.
    4. repec:lic:licosd:20508 is not listed on IDEAS
    5. Jarreau, Joachim & Poncet, Sandra, 2012. "Export sophistication and economic growth: Evidence from China," Journal of Development Economics, Elsevier, vol. 97(2), pages 281-292.
    6. Da Teng & Douglas B. Fuller & Chengchun Li, 2018. "Institutional change and corporate governance diversity in China’s SOEs," Asia Pacific Business Review, Taylor & Francis Journals, vol. 24(3), pages 273-293, May.
    7. Wang, Yong, 2015. "A model of sequential reforms and economic convergence: The case of China," China Economic Review, Elsevier, vol. 32(C), pages 1-26.
    8. Wu, Bao & Wang, Qi & Fang, Chevy-Hanqing & Tsai, Fu-Sheng & Xia, Yuanze, 2022. "Capital flight for family? Exploring the moderating effects of social connections on capital outflow of family business," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 77(C).
    9. Chloé Duvivier Duvivier & Mary-Françoise Renard & Shi Li, 2012. "Are workers close to cities paid higher non-agricultural wages in rural China?," CERDI Working papers halshs-00673698, HAL.
    10. repec:diw:diwwpp:dp1341 is not listed on IDEAS
    11. Sai Ding & Alessandra Guariglia & John Knight & Junhong Yang, 2021. "Negative Investment in China: Financing Constraints and Restructuring versus Growth," Economic Development and Cultural Change, University of Chicago Press, vol. 69(4), pages 1411-1449.
    12. Fariha Kamal, 2014. "Does Firm Ownership Affect Spillover Opportunities? Evidence From Chinese Manufacturing," Journal of Regional Science, Wiley Blackwell, vol. 54(1), pages 137-154, January.
    13. Chen, Shuo & Lan, Xiaohuan, 2020. "Tractor vs. animal: Rural reforms and technology adoption in China," Journal of Development Economics, Elsevier, vol. 147(C).
    14. Fredrik Sjöholm & Nannan Lundin, 2013. "Foreign Firms and Indigenous Technology Development in the People's Republic of China," Asian Development Review, MIT Press, vol. 30(2), pages 49-75, September.
    15. Yong He & Hong Zhou, 2011. "Estimating Chinese Interprovincial OutPut Spillovers with Provincial Input-Output Tables," CERDI Working papers halshs-00553102, HAL.
    16. Christian Dreger & Tongsan Wang & Yanqun Zhang, 2015. "Understanding Chinese Consumption: The Impact of Hukou," Development and Change, International Institute of Social Studies, vol. 46(6), pages 1331-1344, November.
    17. Shalendra D. Sharma, 2009. "Dealing with the Contagion: China and India in the Aftermath of the Subprime Meltdown," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 17(2), pages 1-14, March.
    18. Autor, David & Dorn, David & Hanson, Gordon & Majlesi, Kaveh, 2016. "A Note on the Effect of Rising Trade Exposure on the 2016 Presidential Election," MPRA Paper 112889, University Library of Munich, Germany, revised 06 Jan 2017.
    19. Wang, Chengqi & Kafouros, Mario & Yi, Jingtao & Hong, Junjie & Ganotakis, Panagiotis, 2020. "The role of government affiliation in explaining firm innovativeness and profitability in emerging countries: Evidence from China," Journal of World Business, Elsevier, vol. 55(3).
    20. Yin‐Wong Cheung & XingWang Qian, 2010. "Capital Flight: China's Experience," Review of Development Economics, Wiley Blackwell, vol. 14(2), pages 227-247, May.
    21. Jing‐Lin Duanmu & Maoliang Bu & Russell Pittman, 2018. "Does market competition dampen environmental performance? Evidence from China," Strategic Management Journal, Wiley Blackwell, vol. 39(11), pages 3006-3030, November.
    22. Machacek, Erika & Fold, Niels, 2014. "Alternative value chains for rare earths: The Anglo-deposit developers," Resources Policy, Elsevier, vol. 42(C), pages 53-64.

    More about this item

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bas:econst:y:2009:i:1:p:214-223. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Diana Dimitrova (email available below). General contact details of provider: https://edirc.repec.org/data/ikbasbg.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.