Foreign Direct Investment in China Essay

As China’s economy has progressed they have become more eligible to invest into other countries. As of recent China has been investing into Africa. In May 2014 China’s premier, Li Keqiang, toured Africa for the first time since he took office in 2013. He visited Ethiopia, Nigeria, Angola, and Kenya and met with numerous leaders to discuss the developing relationships between the countries. In conclusion to the premier’s visit he gave a pledge for an additional 12 billion USD in credit and funding in hope of boosting the economic development of the continent… China is forecasted to become one of the biggest overseas investors by 2020.

China’s unemployment rate is 4,040,100. China is the second largest populated country in the world. Agriculture is the most common occupation, Brazil is also big on Agriculture. Brazil enjoyed a positive agricultural trade balance of $43 billion in 2006. China produces mostly rice and soybeans. While Brazil is the world’s largest producer of sugarcane, coffee, tropical fruits, frozen concentrated orange juice (FCOJ). China ranks first in cotton and tobacco and they are the producer of tea, Brazil and Cuba are also a big producer of cotton and tobacco. China also ranks first on red meat. China is also one of the world’s major mineral producing countries. China ranks first on coal production. China’s population is ranked highest for their outstanding

To attract foreign investors China will have to change or modify its foreign policy. These changes first became apparent in 1995 when China opened their doors to American movies, music, and software. Then in 2000 they promised to make their currency convertible for foreign trade. They have also continuously cut tariffs and regulations to gain admittance into the WTO.

Over the past twenty years, China has grown ten percent annual growth and lifted nearly half of the 1.3 billion which is 800 million people out of poverty and growth in the middle class. Today, China boasts having the world’s second-largest economy.

The United States and China share the most imbalanced bilateral trade relationship in the world. The United States imports more goods from China than it exports to a tune of $202 billion dollars each year. All told, China alone accounts for nearly 26% of the

Located in East Asia and holding the second largest land mass of any single country in the world covering approximately 9.597 million km². Most of this vast population are located in the East of the country as the Eastern regions are much more economically developed. China’s industry and transportation are predominantly located on the Eastern coast, meaning the coast also receives a lot more tourism than that of its undeveloped western region. Population in the East is much denser with 94% of the population living on the eastern border.

China’s expansion in trade is accompanied by the increase of FDI and growing trade by foreign invested enterprises. (Fung, 2002) Contribution of FDI has increased dramatically since the early 1980s, especially in the 1990s. During 1980 and 1985, trade by FDI constituted less than 0.6% of total export and 2.1% of total import. The shares went up to 7.3% and 12.8% respectively in the second half of 1980s. In

The major agricultural products of China include rice, potatoes, wheat, peanuts, barley, cotton, oilseed and soybeans. China produces food for 20% of the entire world, although it only takes up 10% of the livable land. Rice is their main product, which takes up 25% of their farming land. China is also the world’s leading producer of cotton.

With the above established, it should now be explained what methodology will be used for the model under review as part of this research and reporting. The main thing of a statistical nature that is looked at when it comes to foreign direct investment is its impact on the economy. Since it is direct, it stands to reason that the investment will not get muddled and polluted by the path it takes into the economy. At the same time, the impact will surely not be a 1:1 situation where one dollar spent means one dollar of growth or anything else resembling that simplicity. As such, the equation and formulas used to calculate the impact of direct foreign investment will not be simple but it will not be overly complex, either (Borensztein, De Gregorio & Lee, 115-135).

One of the important factors of the growth in China and Brazil as BRIC countries is Foreign Direct Investment (FDI). There are several factors that contribute to attract FDI including market size, institutional and regulatory quality, trade openness, infrastructure quality, economic and political stability, and labor quality and cost (The World Bank, 2011). China is still the most attracting for FDI among any other BRIC members (UNCTAD, 2012). Huge amount of market, low inflation and stability of their government are might be the factors that attracted the FDI in China. According to the ministry of China, “Investment from the United States decreased by 26.1 percent in 2011 to $3 billion, while that from the European Union decreased by 3.65 percent to $6.3 billion” so, China’s FDI was hit by the global financial crisis in the EU and US. However, The most attracted FDI in Brazil is in market size sector with the fact that Brazil will be the host of

Foreign direct investments differ substantially from indirect investments such as portfolio flows, wherein overseas institutions invest in equities listed on a nation's stock exchange. Entities making direct investments typically have a significant degree of influence and control over the company into which the investment is made. Open economies with skilled workforces and good growth prospects tend to attract larger amounts of foreign direct investment than closed, highly regulated economies. (Investopedia,

Furthermore, Prime, Subrahmanyam and Lin selected the data to compare levels of FDI and FDI performance, and introduced the Porter's diamond theory to analyze the data. Firstly, Prime, Subrahmanyam and Lin (2011) found that demand conditions, factor conditions, and firm strategy, structure and rivalry can’t certainly verify the larger FDI flows to China as compared with India (pp. 312-320). As Prime, Subrahmanyam and Lin mentioned, both countries have the similar potential market capacity. In the factor conditions (infrastructure, technology and labor force), both countries have made major progress with infrastructure, but weakness remains in both places (Bai and Qian, 2010; Patel and Bhattacharya, 2010; Sweeney 2010). Compared with

According to the International Monetary Fund (IMF), Foreign Direct Investment (FDI) is defined as “cross border investment where a resident in one economy has control or a significant degree of influence on the management of an enterprise in another country.” FDI in the past decade has grown intensively, exceeding the growth of world production and the growth of international trade (Dierk, 2008). Many nations are open and engage in FDI because it will benefit domestic firms. Brazil, a top emerging market, has experienced record number of FDI projects, establishing it as the second most popular global destination in terms of FDI value. The country has experienced steady growth over the past decade and is projected to keep increasing its number of FDIs.

Security investment to external is continual increasing. There are two main reasons. First, many Chinese bank increase the foreign exchange capital because of the innovation or come into the foreign market. Second, may be the international financial market rate increase and local financial finite market, so they choose increase the foreign investment.

In today’s increasingly globally integrated business world, foreign direct investment (FDI) “provides a means for creating direct, established and long-lasting links between economies,” according to the 2008 Organization for Economic Co-Operation and Development Benchmark Definition of Foreign Direct Investment (OECD, 2008, p. 14). Foreign direct investment (FDI) is defined as “an investment made to acquire lasting interest in enterprises operating outside of the economy of the investor,” by the United Nations Conference on Trade and Development (UNCTAD).9