Analysing factors effecting Foreign Direct Investment in China Essay - 1

Analysing factors effecting Foreign Direct Investment in China - Essay Example The benefits in shape of capital financing it generate put forth the idea that FDI plays an important role in the modernisation of economy and increasing the growth. These benefits from the whole process make the governments of countries to provide special incentives for FDI. The growth of the global economy has given rise to the importance of notion of FDI. In the past few years China has emerged as the largest FDI receiver. Objective: The objective of this paper is to ï  ¶ The paper in the first place analyses the three phases of in flow of FDI in the Chinese Economy. ï  ¶ The next part of the paper explains the factors, which contributes in attracting the FDI towards the Chinese economy. ï  ¶ The countries, which contribute to the Chinese FDI, are also discussed. ï  ¶ In the end, we present the different challenges faced by FDI in China. ï  ¶ In the last section of the paper few recommendations are given in order to improve the FDI situation in China. With other empirical evidences a case study is also used, which will analyse the linkage between trade and FDI. The people’s Republic of China (PRC or China, for short) has had a long tradition of isolation. In 1979, Deng Xiaoping opened his country to the world. Although his bloody 1989 put-down of protestors in Tiananmen Square was a definite setback for progress, China is rapidly trying to close the gap between itself and economically advance nations and to establish itself as an economic power in the Pacific Rim. Southeast China in particular has become a hotbed of business activity.