China's Outbound Direct Investment

Entering an untapped international market can strengthen a business tremendously—but what if the costs outweigh the benefits for the market itself? China has long been an important player on the global stage, but recent advances in manufacturing, natural resources, and energy production have catapulted the expansive country to the forefront of international trade. Currently the world’s fastest growing major economy, China is set to eclipse the United States as the world’s largest economy by 2016. Among various domestic and international plays, one of China’s most fascinating uses of its

It is this that has sparked China’s vulnerability to external shocks. In 2011, China’s exports amassed almost $2 trillion, however in Feb 2012, China recorded a $31.5 billion trade deficit as a result of the European sovereign debt crisis in which China’s main trading partners plunged into recession. China’s severe BOGS decrease is an attempt to control growth and a sustained level of 7.5%. Investment policies are also critical for China to achieve economic growth and development. Foreign Direct Investment (FDI) in China is being sought primarily in the redesign of State Owned Enterprises (SOE’s) and in the development of interior provinces. Between 75-80% of World Bank loans to China in 2008 were directed to the central and western regions, the most economically disadvantaged. This promotes increased wealth within China, leading to higher levels of development due to a more positive Human Development Index (HDI), which currently sits at 0.687, up from 0.677 in 2010. Thus, trade and investment are critical factors in ensuring that China’s growth remains sustained at 7.5% whilst still encouraging increases in development.

Our research over the past five years into the battles between multinationals and local Chinese companies reveals that while market dominance by local champions is far from universal, it’s becoming ever more frequent. In industries as different as beer brewing, mobile-phone manufacturing and laundry-detergent production, Chinese companies — often seeming to appear from nowhere — are forcing multinationals to rethink their strategies and their hopes for explosive growth in the China market.

Relationships with China have proved profitable for some major U.S. corporations. One of the reasons that the U.S. has become so dependent

From 1980 to 2010, China relied on a uniquely successful investment- and export-led development model for its 30-year miracle of double digit GDP growth. However, to make rapid industrialization possible, China directed most of its investments to the cities, financed massive urban infrastructure and development projects. In result of

China is supplanting its primary economic opponents around the globe to a great extent without the utilization of power. China 's prosperity denotes the first instance of realm building in the time of globalization. The United States played a key role in China 's economic ascendance by advancing globalization and grasping, lately, free market conventionality (Zhang, Duysters & Filippov, 2012). In the records of history, it will be noticed that it was the United States itself that championed another economic structure which at last undermined its own particular position on the planet. China 's choice to open its economy to the world concurred with the U.S. drive for globalization. In addition, the United States and the Western companies opened the financial conduits to China through direct venture and subcontracting trade agreements. Notably, as the Western capitalism went global, China turned into the factory of the world. China has turned into an undeniably critical part of the worldwide trading framework in the course of recent decades; enthusiasm for the nation and its universal financial strategies has expanded among global business analysts who are not China authorities (Petras, 2012). This paper represents an endeavor to give a review of the business atmosphere toward globalization in China with and a brief outline of the real strides in the advancement of Chinese strategy towards international trade as well as foreign direct investment, protectionism, and their

Chinese enterprises make acquisitions to enter and penetrate a host economy by using state-sponsored soft budget constraints (Warner

It’s a trend that the Chinese government increasingly open market to foreign investors by reducing the barriers of entry. Recently, the State Council of China has altered the foreign investment policies, encouraged and supported the foreign investment on the service sector, especially the labour intensive but environmental friendly business in low developed central or western China (Chen & Liang, 2010). The government has also permitted the foreign investors to set up partnership business with local firms (Cao & Tai, 2009) rather than formerly approved options of joint venture and wholly owned. On the other hand, the current government and communist party are working to ease the social inequality. The minimum wage and annual income protection have been approved and increased in China at present (Wang et.al., 2009). Also, they have promoted the establishment of government-led labour union in major foreign business and expect to require all of them to set up in later (Kahn, 2006), which aim to create official-approved labour protection chapter and collective bargaining in foreign firms.

I found this article "Foreign direct investment: Companies rush in with the cash" on the financial times website (www.FT.com) published December 11, 2002 written by John Thornhill. The reason for choosing this article is my personal interest in the Chinese economy and its attractiveness to the foreign investors. Apart from the foreign direct investment this topic has also helped me in understanding the impact of Chinese economy on the global market.

Some major trade policies have negatively impacted the trade patterns of the two countries in a way that in spite of their growing ties, the bilateral trade relationship is often laden with complexities. According to U.S., China’s unfinished ‘transition to a free market economy’ is the root cause for many trade tensions. While China has liberalized its trade governance over the last thirty years, it continues to maintain a couple of state-supervised policies that apparently distort investment flows (Morrison, 2015). The primary purpose of this paper is to reflect the trade patterns of the two countries- USA and China and illustrate various trade policies practiced by them. It is important to study the impact of policies so that the main areas of issues in the economy can be understood and the imbalances in trade can be thoroughly checked by the government by following protectionist measures.

Over the past quarter-of- a century, China has experienced big changes as the economy has transformed from just limited private sector into manufacturing base of the world, these rapid development and transformation become the gateway to vast opportunities for all industries of the world (Dyer & Singh, 1998); China regional cities offer diverse of business opportunities to companies around the world for businesses to expand into China.

Since the start of reform and opening three decades ago, China's foreign trade has been growing rapidly, even faster than its GDP. Nevertheless, the macro environment nowadays is undergoing influential change, and it is questionable whether China would be able to maintain its current speed of growth. By performing a PESTEL analysis, this essay proposes that China could no longer maintain its current mode of foreign trade with heavy emphasis on labour intensive manufacturing. New areas of growth must be sought in adaption to new conditions in the macro environment in the future.

Tragically this is a marketing strategy for Cisco, an American based firm, to sell high technology products in China. “Generally, foreign firms were unable to establish wholly owned subsidiaries in China as the Chinese government banned direct foreign investment.” [4] Unlike most developing countries, China has been facing with extremely active economic activity and large-scale domestic economies. Together with China’s central planning tends to result in infrastructure investments; this is likely to encourage new entrants.

Paper prepared for an international conference on “China’s Economy in the 21st Century”, to be held on June 24-25, 2002, Hong Kong. We would like to thank Alan Siu and Richard Wong for their encouragement.

According to Scissors (2013), As predicted by some and feared by others that the tidal wave of Chinese investment around the world has not materialized. In the first half of 2013, various obstacles to overseas spending by the People’s Republic of China (PRC) kept growth moderately. The dominance of state-owned enterprises has begun to ease but then energy was again the focus, Likewise, in the first half of the year, Chinese investment in the U.S. was substantial,