20世纪中国的外国直接投资发展分析与评估--Term paper代写范文

Term paper代写范文:“20世纪中国的外国直接投资发展分析与评估”，这篇论文主要描述的是在20世纪的90年代对于中国来说，是一个外国直接投资最为重要的时期，中国作为第三世界中最重要的FDI东道国，对于外国直接投资的发展也是十分重视，并且改革开放与加入世界贸易组织这两种举措也极大的促进了中国对外指直接投资的发展。

Abstract 摘要

This paper will introduce and explain the past picture of Foreign Direct Investment (FDI) in China in 1990s. This period can be considered as the significant period when China is regarded as one of the most important FDI host countries in the developing countries. The explanation of relevant theories on FDI will further provide the sound understanding of the emergence and development of FDI. In the early 1990s, the FDI in China has experienced the rapid development due to the Open Door policy and WTO accession. However, the growth rate of FDI in China in the late 1990s is lower than in the early 1990s because of partly Asian Financial Crisis in 1997. The past picture of FDI will be explained and evaluated in paper.

1. The Theoretical Perspective of FDI 外商直接投资的理论视角

A number of theories have been proposed by scholars to explain the nature, causes and location of FDI. Broadly speaking, there are five major schools of thought on the issues. This section will evaluate the several theories to explain FDI.

1.1 Neo-Classical Theory

This theory sought to explain the movement of global capital on the basis of Hecksher-Ohlin-Samuelson model. In terms of Mark (1992), international fund flows of production factors, including foreign capital are determined by differences between resource endowment and factor proportions among different countries. Hence, investments flow from relatively capital-abundant countries to relatively capital-scarce countries. In other words, the theory focuses on interest rate differential as explanatory variable of cross-border capital movement, which will stop once the marginal productivity of capital in both countries is equalized.

1.2 Industrial Organization Theory

Stephen Hymer developed an Industrial Organization theory in 1960s as the classical theory failed to explain explicitly the transnational movement of direct investment. The essence of the theory is that FDI is a result of market imperfections, which can be caused by both goods and factor markets, scale economies, and government imposed regulations, especially tariff and trade barriers that prevent the efficient allocation of resources and distribution of products (Qu and Green, 1997). According to Hymer (1976), when directly invest abroad, MNCs face disadvantages, such as the information cost and uncertainties regarding the operation of firms within an unfamiliar foreign political, economic and social system, in comparison with indigenous firms. Thus, they must possess some firm specific advantages, which can be expressed as financial strength, patented technology, product differential, established market, and managerial and marketing skills, to compensate for those inherent disadvantages and outbid domestic firms.

1.3 Internalization Theory

The internalization approach to FDI, advocated by P. J. Buckley and M. Casson in 1976, marks a distinct shift from explaining why or how a MNC engages in international production to dealing the question of keeping certain activities under a MNC's control (Buckley and Casson, 1976). It calls attention to advantages which may accrue to a firm from internali

zation, i.e. engaging in foreign production itself, rather than sub-contracting of licensing it to a foreign firm (Pont 2000). The philosophy of the theory is that an MNC carry out various activities that are interdependent and related through flows of intermediate products. Since market for intermediate products are difficult to organize, these transactions can be handled more efficiently within the firm by an internal hierarchy rather than by an external market.

2. The Current Pattern of FDI in China.中国FDI的模式。

In 1979, China introduced the Open Door policy and market reform, initiated by the establishment of Special Economic Zones (SEZs) in order to attract foreign capital. China formally started its strategy of economic reform and opening up to the outside world in 1978 in order to achieve the objective of modernization. On the external economic front, China formulated the Joint Venture Law in 1979 when foreign direct investment (FDI) was first permitted in China. In response to the progress in economic reform and opening-up, the Chinese economy has achieved a spectacular annual growth rate of over 8% and China is now a major host for FDI inflow in the world. The Word Trade Organization (WTO) accession makes it necessary for China to gradually establish an economic regime with economic mechanisms that are in line with the advanced market economies. This will promote further economic reform and accelerate China's economic growth.

Foreign Direct Investment has experienced rapid growth since 1979. The growth has been subject to considerable fluctuations at different times. In large part, the fluctuations of FDI reflect adjustments in Chinese government's policies and changes in the investment environment. In general, when China has a sound macro-economic performance and economic liberalization, a rapid growth in FDI inflow will take place. On the contrary, poor economic performance and government restrictions have tended to discourage economic reforms and halt the liberalization process. Then, the volume of foreign investment will decline (Sun 1999).

As shown in Table 2.1, actual FDI grew slowly in 1990 due political issues. However, beginning in 1991, China has greatly increased its amount of foreign investment. The amounts of actual FDI increased more than double in both 1992 and 1993 and rose a further one-fifth in 1994 to reach almost US$ 340 billion actual investment. The dramatic increases in FDI in the first half of the 1990s appear to be caused by four factors:

Firstly, the magnitude of aggregate FDI flowing to less developing countries (LDCs) increased significantly in the 1990s. China has been the world's largest FDI recipient among LDCs since 1993. In recent years, FDI to China accounts for 1/4 to 1/3 of total FDI inflow to LDCs.

Secondly, China's seemingly political stability, together with dramatic growth of the domestic economy after 1992, has led to a fundamental reassessment by foreign investors of China's economic and investment potential. As a result, China is regarded as a less risky political and economic environment by international risk assessment organizations such as Economist Intelligence Unit (Lardy, 1995).

Thirdly, China has systematically liberalized its foreign investment regime. Some of the preferential treatments to attract FDI such as special tax concessions, liberalized land leasing and so on, were only available in the four SEZs in the south coastal region in the late 1970s and early 1980s. This situation has been changed since the 1990s when the special provisions were made widely available in a growing number of coastal cities, economic development areas and high technology development zones. China also open up sectors such as real estate, trading and retailing which has been previously prohibited for foreign investors. Liberalization of FDI in the property market contributed much for the rapid growth of FDI in the early 1990s.

Fourthly, an increase in FDI inflow is partly due to the phenomenon of recycled capital of Chinese origin. In order to take advantage of the special tax and other incentives provided to foreign invested enterprises, many Chinese firms cannot afford not to move out and invest back into China which is considered 'foreign investment'. Therefore, there was a flood of Chinese firms moving money off-shore and then recycled it back into China. The World Bank estimated that these might

Table 2.1 demonstrates a somewhat different pattern in the growth development of contractual and actual FDI amount in the early 1990s. The contractual FDI increased sharply in early 1990s. In 1993, both the number of projects and the total contractual amount reached their highest level. However, the actual amount of FDI has grown more slowly and did not begin to decrease until 1999.

From 1990 to 2002, the FDI realization rate of China has increased steadily till 1999, with the exception of the early 1990s. As mentioned above, there was an obvious gap between contractual and actual FDI inflow during this period. The political turbulence in 1989 contributed to the decline in the percentage of FDI realization. In addition, there was a fund shortage problem due to government's tight credit squeeze to control the overheated economy. Moreover, many announced projects might not be realized. Phony joint ventures were set up to take advantage of favorable tax incentives. Therefore, in the 1990s while contractual FDI surged to a record high, actual FDI utilization had only increased slowly. The realization rate of FDI fell to its lowest level of less than 20% in 1992 but started to increase steadily since then.

3. Conclusion 结论

This paper has introduced and explained the pattern of FDI in China. Moreover, Neo-Classical theory, industrial organization theory and internalization theory will be introduced to explain the essence and philosophy of FDI. Before 1999, the actual amount of FDI has experienced the sound development. However, the realization rate of FDI is lower, particularly during the period between 1990 and 1996. The challenges of financial crisis and business environment facing China will be considered as the significant determinations of FDI.

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