| By the end of the year 2009, China has experienced the eighteenth consecutive year as the top developing country in terms of the investment quantity attracted from overseas resources. The sufficient amount of overseas investment has greatly promoted the rapid social and economical development of the country. However, statistics indicate that only a minor portion of these overseas investments comes from hi-tech oriented large international corporations headquartered in developed countries, and the merging projects, which are normally the typical approach of international direct investment, have proved to be very rare. This tendency is actually not in conformity with the investment demand of the country. At the same time, a number of provinces, especially the comparatively less developed inland provinces, have been found attracting overseas investments only for its own sake without a scientific blue print to better address their actual economical development bottlenecks. Consequently, urgent needs have been experienced to better ensure that overseas investment be attracted on a scientific decision making basis.As one of the less developed inland provinces, Shanxi has been exerting significant efforts to implement the opening up strategy. However, despite these hard endeavors, the investment attracted from overseas resources in this province has been ranking the last among the six peer provinces during the past six years. Shanxi province enjoys abundant natural resources endowment, rich historical and cultural resources as well as advantageous geographical location. As the only demonstration province for coal industrial sustainable development in China, Shanxi has been experiencing a gold age of economical boom in recent years, and both the government and the grassroots have very strong desires to take advantage of the overseas investment to help with its own social and economical development. Thus, what exactly is the bottleneck to the overseas investment to this province? With over ten years of experiences of overseas investment management on behalf of the provincial government, the writer has been studying these confronting issues all the time. And the very choice of study area for the doctorate program has been intended to help investigate into the existing shortcomings in the overseas investment policies and implementation management in China, so as to ensure a breakthrough in dealing with these problems in the country and in Shanxi Province in particular.Temporary direct international investment theories and practices have been focusing attentions solely on the part of the investment without sufficiently addressing the specific demand of the intended investment environment. With the deepening process of economical globalization, especially at the background that the concept of sustainable development has already been established and accepted in the developing countries, more and more emphasis have been attached to the principles of harmonious development and win-win practices. This study intends to establish a mechanism to achieve the mutual benefit and win-win objectives during the transactions between the international investment corporations and the countries and areas that attract these investments. In order to achieve this ambitious target, the writer has made a thorough study of the existing theories and practices in international direct investment under the kind guidance of the tutor, and carefully investigated into the actual policies and practices of attracting the overseas investments as adopted in the inland provinces like Shanxi as well as the other provinces in China. On the basis of these investigations, the writer analyzed the interactive mechanism among the investment, the parties attracting the investment, the investment environment and the investment projects from the perspectives of ecology and ecological balance, and proposed the methodologies of investment ecological system study which is hoped to be adopted to tackle with the existing problems and inefficiencies in the practice of attracting overseas investment in China, especially in the inland provinces like Shanxi.Investment ecological theory points out that the investment ecological environment is the decisive factor of the actual benefit achieved by the investment and the party attracted and utilized the investment through the investment activities. The investment and the investment environment, or more exactly the party that attracts the investment and thus offers the investment environment, interacts with each other by adapting their decision making, policies and practices, so as to eventually satisfy the actual needs of the other party, and thus reaching an investment ecological balance. In order to reach such a balance, the party of investment should carefully study its choice of investment environment and its adaptability to such an environment, while the party attracting and utilizing the investment should study how to improve the investment environment it offers and its choice of potential investments. That is to say, the success of the investment depends upon its choice of the investment environment and its own adaptability to the environment, while the success of the party attracting and utilizing the investment depends upon how it improves the investment environment it offers and its choice of the appropriate investment. Only when the pursuits of the investment and the party utilizing the investment are in line with each other that the objectives of mutual benefit and mutual satisfaction could be achieved. Consequently, the party attracting the investment should first of all obtain a clear understanding of its own objectives of using these investment, or why use the investment and what kind of investment. On the basis of this clear understanding of its own objectives, it should then proceed to investigate into the demand of the potential investment that could help achieve these objectives, and take specific measures to improve its investment environment so as to ensure that the demand of the investment is satisfied. Only by so doing could its own demand be satisfied in turn and thus maximize the benefit of the investment project.On the basis of the above theoretical analyses, the paper also carried out a number of case studies of investment and attracting investment practices both in Shanxi province and in China as a whole. Through thorough analyses of the statistics obtained from Shanxi province, the paper comes to the conclusion that the problems experienced by Shanxi province all resulted from its imbalanced investment ecological system. With the SWOT approach, the paper evaluated both the advantages and the disadvantages of the various factors in the investment ecosystem in Shanxi province, especially in light of the recent global financial crisis and the various new policies issued and implemented by the national government to deal with this crisis. Policy recommendations were then put forward for Shanxi province to improve its investment ecosystem environment.The paper pointed out that China is experiencing a transitional period in terms of its strategies of attracting overseas investment. With the further transformation of the government functions and the deepening of the reform policies in the financial system, the investment ecological environment in China shall be further improved so as to improve its capabilities of satisfying the demands of the potential investments. Meanwhile, with the standardization process of overseas investment management, more and more attention shall be paid to improve the quality of the investments attracted and the efficiency of attracting investment, so as to better satisfy its own development requirements.Over the past 30 years after the reform and opening up policies were implemented, the overseas investments attracted to Shanxi province has been taking a very active role in Shanxi province in promoting the international oriented trade, the improvement of the investment environment, the social and economical reform as well as the practice of international traditions. However, such problems have also been observed in this province in the field of overseas investment as insignificant total amount, comparatively low quality and low contribution to the economy, low benefit level, significant environment pollution, and waste of land resources and lack of insurance of the safety of counterpart funds. The paper pointed out that all these problems rooted more from the imbalanced structure of its investment ecological system than from the macro national economical policies, and the imbalanced structure of the investment ecosystem is in turn due to the inappropriate direction of overseas investment utilization, lack of clear understanding of its own priorities of overseas investment demand, insufficient investment promotion mechanism, lack of sufficient study of the demands and objectives of the overseas investment and thus inappropriate choice of overseas investment sources. Meanwhile, the inactions or misbehaviors of the government and the inappropriate investment management concepts and mechanism proved to be the best manifestation of this imbalance.Shanxi province enjoys very abundant natural resources, rich tourism resources and cultural inherits. It also boasts the very advantageous geographical location by connecting the to-be-developed vast west regions and the east costal areas. However, all these endowment has not yet been taken full advantage of yet in the process of attracting overseas investment. Besides, such factors essential in the investment ecosystem as the insufficient capacity of land resources, water resources, ecological system and environment, the total available human and technology resources all constricted the inflow of overseas investment into this province and in consequence the overall social and economical development. Now that Shanxi province has already been chosen by the national government as the demonstration province for coal industrial sustainable development, cycling-oriented economical development pattern and ecological system construction, it shall certainly experience a gold age of overall social and economical development, which shall surely be able to attract overseas investment at a much faster pace and volume. Furthermore, the recent macro economical policies adopted by the national government to minimize the adverse effect of the global financial crisis since the third quarter of the year 2008 shall also offer more development opportunities for Shanxi province as well. However, it can be reasonably anticipated that during this process, more problems shall occur and needs to be more appropriately addressed in the field of overseas investment management. Consequently, whether the province could take full advantage of these development opportunities shall largely depend upon whether it could appropriately adjust its development strategies, especially its overseas investment utilization and management strategies.In view of this adjustment, the paper raised a series of policy recommendations for Shanxi province all aiming at improving its investment ecosystem. These policy recommendations cover the areas of establishment of correct investment attracting principles, optimization of investment ecological environment, satisfying the specific demands of the potential investments and investment promotion. Introduction of overseas investment to Shanxi province would not only help to mitigate the development bottleneck of insufficient funding, but more importantly help to introduce advanced modern technologies and management concepts, promote the reform and reconstruction of the economical structure, the administration structure and the existing development pattern, and foster the creativity, so as to sustain the overall social and economical development. Intense attentions should be paid to better balance the introduction of investment and its own development objectives and demands, introduction of investment and introduction of advanced technologies and concepts, so as to make sure that the investment projects could have a sustainable development potential in the province. Specific efforts should be exerted to avoid pollution intensive investment projects and take full advantage of its overseas investment introduction potentials.With a accurate understanding of its own development bottlenecks and demands, Shanxi should offer more clear-cut guidance to the potential investments in regard with the industries and regions that demand these investment. Priorities should be given to the industries with significant development potentials and industries that urgently need rapid development, and key development areas as defined in the long term social and economical development program. At the same time, Shanxi should take immediate measures to optimize its investment ecological environment to better address the needs of the investment. In order to achieve this target, Shanxi should enhance its decision making system and further expand its investment introduction channels so as to attract the most appropriate investment that can best satisfy its own development demands.The paper had carried out a comprehensive study of the overseas investment introduction status in China and in Shanxi province in particular with the methodologies of investment ecosystem theories, SWOT analyses, equilibrium analyses theories, complicity analyses and tendency analyses with the help of case studies and surveys. Based upon these comprehensive analyses, policy recommendations were also proposed to better address the existing problems.The following breakthroughs were achieved in the study methodologies in this paper.(1) The paper for the first time proposed the theory of investment ecology, which was used to explain and hoped to offer some guidance to the overseas investment introduction practices in such inland provinces of China like Shanxi. The paper also pin-pointed the two fundamental principles of the investment ecology theory, that is for the investment the decision making should be focused on the choice of the investment environment and its adaptability to the environment, while for the party that introduce the investment the fundamentals are the improvement of the investment ecological environment and the appropriate choice of potential investments. The equilibrium of the investment ecosystem is the key and utmost insurance to the mutual benefit and win-win objectives of both the investment and the parties that introduce the investments.(2)A model illustrating the interactive mechanism among the various factors in the investment ecosystem was initially proposed in the paper.(3)A dynamic analysis of the present investment ecological environment in China was carried out in the paper with the help of investment ecology theories, and a case study was also made specifically in regard the investment ecological status in Shanxi province.(4) Under the guidance of the investment ecology theories, a series of policy recommendations were proposed to Shanxi province from the point of view of choice of appropriate investment, satisfaction of the demands of the potential investment and improvement of the investment ecological environment. These recommendations may prove to be suggestive and helpful not only to Shanxi, but also the other inland provinces of China.(5)The investment ecology theories proposed in the paper covered both the investment activities and the investment attracting activities. For the parties and areas that intend to introduce investment, these theories could be used for decision making not only for attracting overseas investment, but also attracting domestic and private investment. For the parties of investment, these theories of choice of and adaptively to the investment ecological environment may prove to be quite suggestive and helpful, especially for the Chinese enterprises that intend to plan overseas investment projects.
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