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Assessing foreign direct investment relationships between China, Japan, and the United States

  • Greaney, Theresa M.
  • Li, Yao

China has received enormous inflows of foreign direct investment (FDI) in recent years, including significant flows from Japan and the US. We examine these investment flows in detail to gain perspectives on their relative importance for the three countries involved. We also analyze the industrial composition of FDI flows over time. American FDI flows to China have been less concentrated in manufacturing than average for investors in China while Japan's FDI flows have been much more concentrated in manufacturing, particularly in transport, electrical and machinery industries in recent years. Using survey data from American and Japanese affiliates, we compare the employment patterns and sales destinations of American and Japanese affiliates in China. We find a much higher degree of export-orientation for Japanese affiliates than American affiliates, with the latter tending to make the vast majority of their sales in the Chinese market. Over time, however, we find a tendency towards convergence in the sales destinations of Japanese and American affiliates.

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Article provided by Elsevier in its journal Journal of Asian Economics.

Volume (Year): 20 (2009)
Issue (Month): 6 (November)
Pages: 611-625

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Handle: RePEc:eee:asieco:v:20:y:2009:i:6:p:611-625
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  1. Robert E. Lipsey, 2000. "Affiliates of U.S. and Japanese Multinationals in East Asian Production and Trade," NBER Working Papers 7292, National Bureau of Economic Research, Inc.
  2. Cassidy, John F. & Andreosso-O'Callaghan, Bernadette, 2006. "Spatial determinants of Japanese FDI in China," Japan and the World Economy, Elsevier, vol. 18(4), pages 512-527, December.
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  4. Kiyoyasu Tanaka, 2009. "Vertical Foreign Direct Investment: Evidence from Japanese and U.S. Multinational Enterprises," Global COE Hi-Stat Discussion Paper Series gd08-046, Institute of Economic Research, Hitotsubashi University.
  5. Andrew K. Rose, 2002. "Do We Really KNow that the WTO Increases Trade?," Working Papers 182002, Hong Kong Institute for Monetary Research.
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  8. Gu, Weishi & Awokuse, Titus O. & Yuan, Yan, 2008. "The Contribution of Foreign Direct Investment to China's Export Performance: Evidence from Disaggregated Sectors," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6453, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  9. Lee Branstetter & C. Fritz Foley, 2007. "Facts and Fallacies about U.S. FDI in China," NBER Working Papers 13470, National Bureau of Economic Research, Inc.
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