FDI In The Path Of International Industrial Transfer And The Chinese Industry To Undertake

This dissertation focuses on the international industrial transference by the route of foreign direct investment (FDI), especially on its framework, mechanism, law and its effects on China. It analyses the merits and demerits for China as one of the major termini of the transference, and tables proposals for government regulations and industrial policies.The first two chapters depict prevailing theories on the international industrial transference. A redefinition of the category of industrial transference is one of the innovations of this dissertation on which the size discrimination of the transference is emphasized dramatically. The actual statistical system on GDP has limitations especially for an economy with large FDI stock as China. The data on industrial structure by GDP in an economy with mass FDI are not as accurate as in an economy without FDI. There are three ways of international industrial transference, FDI, international trade, and production by contract. This dissertation will focuses on the way of industrial transference by FDI. The illiquidity of production factors and the imperfect competition are preconditions of international industrial transference. The transference of the marginal tache on the industrial chain is becoming the main stream compared with the transference of a whole industry and of the marginal enterprises within an industry. The margin of division has been shifted toward the scale of the chain of industry from industry as a whole.Chapter 3 works over the motives of outward transference of industry and the location choices. The major motives of outward transference for the industrialised nations are efficiency-oriented, market-oriented and regulation-oriented. As a result, their competition capability, international market force, industry structure, and the efficiency of domestic economy are getting better status. The factors which influence the location choices of FDI are factor cost, industry cluster, the capacity of termini market, social-political surroundings, and so on. The sequence of location choice is from developed countries to newly industrialized countries and districts and to the developing countries.Chapter 4 investigates the complicated impacts of industry transference on the economies of home countries. For the home country's domestic economy, the outward transference of marginal industry and the marginal link of industry chain will optimize the market resource allocation, improve industry structure, and strengthen its international competition while the transference releases market space for home country's competitive industries. As for the labor market in the home country, the industry transference would increase the unemployment in the short run, and be of positive effect on employment in the long run due to the domestic industry structure improvement and hence the booming economic growth. The historical statistical data has shown that the unemployment rate in most developed countries has been decreasing when the industry transference has been increasing.Chapter 5 and 6 stress on the traits of industrial transference into China and the effects on Chinese economy. The sphere of industrial transference into China is mostly manufactory and by greenfield investment while in the world as a whole of which is service and by M&A. There is still insufficiency in investment on one hand and relatively sufficiency in capital on the other hand in the domestic market of China, though China's incentive to absorb industrial transference does not tally with the Double Gap model. Investment by multinational enterprises could activate the stagnant capital to a certain extent. International industrial transference into China enhances the concentration ratio, and raises entry barriers in China's domestic market. It is significant that self-dominated industry and foreign controlled industry shoud be distinguished for the point of view of national interests. Policy making should focus on the interests of self-dominated industry, and view GDP as subordinate target. Industry policy should aim at spillover of technology of FDI which is the cardinal criterion of FDI's significance. The background of recent trade conflict between China and its developed trade partners is greatly linked with the mass international transference of manufacture into China.Chapter 7 proposes the ways and methods of government regulations and industrial policies in the circumstance of industrial transference into China. The relative regulations involve economic safety and antitrust policies. Economic safety comprises national safety, social safety, public safety and industry safety. A mechanism toward economic safety should be established to prevent from FDI's negative effects on Chinese economy. Antitrust policy is about to form impartial market order, and to protect infant industries. Industrial policy should play the role of improving technology spillover and industry structure upgrading. Spillover is unprecedented significant in Chinese nowadays economy as the double-gap of capital and foreign exchange lessened evidently. It should be the cardinal target of industrial policy for the Chinese economy.