The Study On Quality Of Utilizing FDI In China

Based on gains from FDI, this paper establishes an assessment framework of the quality of utilizing FDI in China from the aspects of introducing and utilizing FDI to assess the quality of FDI itself and achievements of utilizing FDI respectively, so as to make a preliminary determination of actual conditions and regional differences of utilizing FDI by several norms, to analyze effect mechanisms of favorable treatments and exchange rate on introducing FDI in China, and to put forward measures to improve the utilization of FDI.Several methods, such as normative and positive analyses, induction and deduction, theoretical abstraction and practical investigation, statistic, regression analysis, the method of co-integration and panel data model, have been applied in this paper for inspecting quality of FDI in China, mathematical logical models and deduction for revealing affection mechanism of favorable treatments and exchange rate on FDI in China.The content of this paper is listed out as follows:Assessment of the quality of utilizing FDI is decided by gains from utilizing FDI. Norms of introducing FDI are for assessing the potential benefits from FDI in the process of introducing it, while the norms of utilizing FDI are for determining the actual benefits from utilizing it. Scales, sources and utilizing modes of FDI are the norms for assessing introducing FDI. Positive analyses with statistics reveals that the quality of FDI positively interrelate with its scale. The quality of FDI from Hong Kong, Macao and Taiwan is worse than that from other regions according to lots of norms, but from points of spillover effects and output increasing quality, we should draw a conclusion as to specific periods.Moreover, the quality of FDI with different utilizing modes is difficult to determine. Quality of FDI in China is being continuously improved over time. Specifically, it varies according to different norms. While having positive effects to a certain extent on adjusting our industrial structure, FDI hinders the further optimization of the industrial structure in China. Judging by sources, utilizing modes, regional distributions of FDI, knowledge and technology from FDI and actual FDI appropriative rate, we find that the quality of FDI in China is relatively low.Positive analyses on utilizing FDI reveals that FDI in China has brought positive effects on economic growth, upgrade of industrial structure, development of modern industry, direct & indirect contribution of export, expansion of employment and diversification of economy, but quality of utilizing FDI is not high in accordance with norms of quality of economic growth, coordinative development of regional economy, localization of FDI enterprises, spillover effects, levels of R&D, net welfare effects of tax favorable treatments and affection on private enterprises in China.There are wide gaps for quality of introducing FDI in different regions, and the gaps for quality of utilizing FDI vary with the changing of specific conditions. We shouldn't determine the differences in quality of FDI in different regions by scale. If judging by potential technology spillover effects, quality of FDI in western and central China is higher than that in eastern China; by potential management spillover effects of FDI, the quality of FDI in central China is higher than that in eastern and western China; by technology levels, the quality of FDI in western and eastern China is higher than that in central China for lots of inspected years. By norms of FDI exports contribution, quality of FDI in eastern China is the highest, the next is central China and the lowest is western China. By norms of assets and tax contribution, the quality of utilizing FDI in central China is higher than that in eastern China; by output quality and localization extent of FDI enterprises, utilizing quality in eastern China is lower than that in central and western China. From the point of economic growth and spillover effects, utilizing quality in eastern China, in central China, in western China, is high. From the point of the effect on quality of economic growth, the quality of utilizing FDI is higher in Helongjiang, shanxi, Neimonggu,Gansu,Guangxi,Yunnan,and in eastern coastline provinces and next some coastline provinces and Shaan'xi, as well as Xinjiang autonomous region, is low. From the points of promotion of hi—tech industries and optimization of industrial structure, the quality of utilizing FDI in Shanxi, Liaoning, Jilin, Shanghai, Jiangsu, Zhejiang, Anhui, Shandong, Hubei, Hainan, Sichuan, Ningxia, Xinjiang, is high, and in Beijing, Tianjing, Guangdong, Fujian, Hubei, Guizhou and Shaan'xi, Neimonggu, Heilongjiang , Jiangxi, Henan, Guangxi, Yunnan, Shanxi,Gansu, is low. From R&D, quality of FDI in only 7 eastern coastline provinces and cities is relatively high while that in other provinces is low.Being one of the important factors affecting the quality of utilizing FDI, favorable treatments always accompany with the process of utilizing. Mathematical model for assessing introducing FDI by favorable treatments explains the reasons that favorable treatments for introducing FDI before 1992 resulted in decrease in quality of FDI, and with the acceleration of marketing since 1992, quality of introducing FDI has being improved. In addition, exchange rate affects quality of utilizing FDI through affecting motives, sources and scales of different FDI projects.To transform from the mode only concerning the amount of FDI to the one concentrating on the quality of utilizing FDI, we should adjust strategy and policy for FDI via enhancing supervision, promoting localization of FDI enterprises, creating fair competition environment, improving deposit of human resources and innovation capacity of enterprises so as to improve the quality of utilizing FDI. Meanwhile, we should optimize institutions, increase investments to science & technology and education, encourage and support private enterprises to improve its quality.