The Causes and Future of Taiwan and Hong Kong's FDI in Mainland China

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.

This paper presents the results of the authors’ detailed research into competition between multinationals and local Chinese companies in 10 industries over the past five years. They conclude that local companies are now threatening multinationals’ plans to conquer the China market. They analyse this new competitive game in terms of a dynamic battle of competencies. Multinationals start off with better industry-specific technology and know-how, and a higher level of competence in key functions like marketing and financial management. Chinese companies enjoy a better understanding of the local market, lower

For example, the economic and trade development between the United States and ASEAN will first boost the economic development of ASEAN. With the continuous strengthening of economic and trade cooperation between China and ASEAN, China's economy will also develop continuously. Chinese enterprises are now actively participating in the process of economic globalization through outward FDI. In these countries that have signed free trade agreements with the United States, Chinese enterprises can make good use of favorable local resources and other factors of production to make investments and continuously upgrade their businesses. Own capital and competitiveness, and improve the position of Chinese enterprises in the world.

• Farhoomand: National Innovation Systems of China and the Asian Newly Industrialized Economies: A Comparative Analysis. Asia Case Research Centre, University of Hong Kong, HKU392. Handed out in class.

This observation from Jeffery Schott of the Institute for International Economics captures the essence of the China-World Trade Organization debate in America and the world today. China’s unprecedented economic growth has put it at the forefront of the US trade agenda. America’s is the biggest economy and China’s is the most populous nation, in terms of sheer number of people. To

China’s success in consumer electronic manufacturing can be traced to the creation of special economic zones in the early 1980s, intended to increase “foreign capital and boost exports as the means to integrate regional and global economies” (Chan and Seldon 2013, 103). This capitalism was a sharp departure from the previous Communist based economic policies that dominated the country for decades (Ya and O 'Donnell 2017). The Shenzhen Special Economic Zone (one of four) was established in May 1980 adjacent to the border with Hong Kong, which was experiencing its own economic boom (Ngai and Chan 2012, Ya and O 'Donnell 2017). Manufacturing in the Shenzhen Economic Zone grew exponentially after the Chinese government began offering

China applies significant restrictions on foreign investment. But still maintains one of the world’s best economies. There are three main principle industries in China; Agriculture, Industry, and Services. Each contributing 9.7%, 43.9%, and 46.4% respectively to the overall GDP of China. The state government of China however has a huge influence on industry, out of the 61 Chinese enterprises on the Fortune 500 list, only four of these enterprises

However, the rapid development of China’s economy and her enormous market potentiality give the Chinese government leverages to influence Taiwan’s international relationships; in fact, Taiwan’s exports to China, Hong Kong, and Macau combine more than one-third of her total exports, and Beijing makes no secret of her intention to take advantage of this dependence (Subba, 2016). For instance, instead of using “Republic of China”, Taiwan was forced to use the name of “Chinese Taipei” to join the Asia Pacific Economic Cooperation

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.

Zhang portrays that the export levels in China rose as a result of the expansion of multinational corporations. This suggests that as exports are a component of aggregate demand as exports rise aggregate demand rises meaning China 's economy is growing in theory. This is supported by Sun (2002) by showing the macroeconomic impacts that FDI induces. He recognises that FDI influences trade flow as he sees that China 's total trade volume relative to GDP rose from 15.2 percent in 1980 to 26.8 percent in 1995. The more coastal you go the more influential the foreign direct investment contribution becomes.. Sun concludes that FDI is a form of trade creating in China. Chen (1999) ran cross-sectional regressions on 29 provinces in different years and confirmed that FDI does positively impact upon both promoting China 's host province total trade flows with the rest of the world and on increasing bilateral trade flows between China and its trade partners. The journal raises the idea of FDI and technological advancement promoting economic growth to be inconclusive. Naughton (1996) highlights a number of factors that limited the impact of FDI on China 's domestic economy. He states that the FDI was distributed provincially especially in Guandong who prosper from investment coming in from Hong Kong. Secondly, up to 1991 most of the output of FIEs was exported meaning that the foreign firms that were present gave no significance; foreign investment also never went above one

The main advantage of doing business in China is the fact that China has emerged as one of the world’s strongest economic forces, driven by the shear number of

Taiwan started off as a poor island, and through its time it started to grow. With the help of the National Transit Database, Taiwan started to produce and changes in the structure of Taiwan’s industry begun to show that the whole economy was starting to increase. The orientation of business start-ups were redirected to IT industries and service sectors, making Taiwan, what it is now, one of the worlds largest leading electronic hardware manufacturing businesses. This success was largely recognised in two distinct features; 1) “the physical state of distinctive social capital inherent in the Chinese family entrepreneurs” and 2) “the institutional support from the government and other entities, such as technology perks for the creation of scientific and technical knowledge, and most important, the diffusion and exploitation of technology based opportunities by

Another factor was a result of watching the technological revolution of the 1990s. Chinese leaders wanted China to participate in these developments, and this would be much easier if China was seen as a satisfying economic partner. Cooperation with WTO would also include protection of intellectual property (Prime, 2002).

A key challenge faced by potential entrants into the Chinese market is the increasing emergence of competitive local enterprises. In 2011, China’s 12th Five Year Plan came into force, shifting the focus of social and economic measures to the strengthening of China’s new home-grown enterprises. In 2010, 60% of China’s GDP came from domestic private enterprises – this is in striking contrast to the 38% they contributed in 2005. REF!!! Indigenous innovation policies are inhibiting foreign firms from fully exploiting China’s growth whilst simultaneously providing an advantage to local competitors.

Growth in exports and Foreign Direct Investment (FDI) was extremely important to China’s economic success. During Mao’s last years in power, China was inaccessible to the outside world and this was costing the country growth-wise. Other countries such as Japan and Hong Kong were experiencing rapid growth from exports as shown in Exhibit 6, and China wanted to follow in their footsteps. The country has hard-working and educated people who could help make this a reality and Deng knew this was the next step in helping the country to be among the most advanced and most improved4. The United States has always been a wise contender and is always looking for ways to better its