Foreign direct investment (FDI) is created when a company buys assets in foreign country and invest in foreign countries property, plant or equipment, and also the participation a joint venture with a foreign local company. In addition, when a company begins FDI, the company will become a multinational company. Foreign direct investment has been spreader significantly in the previous two decades through the world economy. More and more countries and sectors has constitute to become one of the international foreign direct investment network. An important force creating better global economic combination are represented by different types of FDI. (Mody, 2004). In the following discussion, there will be reasons why China remained…show more content… (James, 2009). Even in this kind of bad circumstances, China still remained as a largest recipient of FDI. China has listed of the top ten investment destination in the world in the consecutive year and its global market index has recorded 251 which is the highest in the ranking, were continued by United States of America by 212 and Brazil by 198. (Chinadaily, 2013). It showed that China has beat up USA for the first time since 2003 and maintained as the biggest country of FDI in the world in 2012 which proved the global investors are still confident to create FDI in china even though the downtrend of its economy which also proved that china is the most attractive country for investment. In addition, Most of the foreign invested enterprises only have to pay approximately around fifteen percent of profit tax at an actual rate in the first seven years of operation meanwhile the legal company income tax rate for home firms were thirty three percent which is significantly higher, showed an enormous benefits for FIEs and this preferential tax treatment has granted FIEs for nearly three decades.
To attract FDI, corporate tax incentives has been used worldwide, as FDI significantly boost up the productivity and the growth of economic. The reason why China has become the most attractive destination of FDI is that its FDI policies, huge labour supply and low cost of it, stable economic and political environment. (Deng et al., 2007). FDI inflows into China