Research On Foreign Direct Investment In China And The Strategy To Attract Foreign Direct Investment In Xinjiang

The international direct investment is the result of the constant deepening in the international economic labor division, the promotion of the international economy and technical and the reform of international environment. It can not just only expand the low cost superiority from the motherland to the host country, but also can optimize the resources disposition in the global scope. And also it can strengthen two kinds of competitive advantages in a more widespread scope to achieve benefit maximization both in long-term and the global scope. Especially, for the developing countries, the international direct investment is one of the main impelling forces to the economy growth and the greatest capital origin; moreover, it has the significant catalytic effect in improving the industrial structure.The manner of the Chinese government to the foreign direct investment is positive and open. Seeing from the realistic background of the Chinese economy, China has opened the entrance to the foreign investment since the reforming and opening to the outside policy started in1978. Along with a set of special economic zones been set up in Shenzhen, Zhuhai, Shantou and Xiamen during1979-1980, massive foreign investments rushed into the special zones, which became a special economic scenery. After the year1992, the course of opening from the eastern part to the mid-west area continuously increased. Foreign direct investment in China experienced a rapid development both in the quantity and the scale. Meanwhile, the active utilization of foreign direct investment has maintained a stable growth.At the same time, we must notice the increasing problems of FDI operation and of the competition of cooperation with Chinese enterprises as the expanding of foreign direct investment. The negative effect has already started to appear, and has had the various adverse effects to China’s economy and the development of the society. Moreover, there is a significant difference of the purpose in attracting foreign investments comparing to the one we had before to fill domestic demand of economical development, since now we have got the large amount of bank deposit and huge foreign exchange reserve.Should we say that, the utilization of foreign investments plays a positive effect rather than negative? China, as a developing country, still got plenty problems in our less advanced techniques, heavy employment pressure, unreasonable industry structure and the imbalance of local development. Therefore, the utilization of FDI becomes more necessary. We should make full use of its positive effect; meanwhile take effective measures to attenuate its negative effect. Especially in Xinjiang, whose economy is comparably weak in the lacks of fund, management technology and the essential factors is short; moreover it faces a greater demand of development fund and techniques. Therefore, it is an effective solution to introduct foreign investment to alleviate the contradictory of fund supply and demand in order to promote the economical development effectively and realize a local rapid economy development in Xinjiang.To this problem, the basic principle in this paper is the Marx doctrine. It makes an organic combination of Marx doctrine of political economics and the modern western economic theory. Together, it adopts the method of literature retrieval, yearbook and dynamic panel data model methods to collect and process data. Based on literature analysis of the endogenous economic growth theory and the foreign investment theory, the paper makes a systemic analysis on the characteristics of international direct investment in the new century, and analyzes the trend of the new century foreign direct investment in China as well as the empirical analysis of the impact it brings on China’s economy. At last, the paper proposes main problems of China’s utilization of foreign direct investment in the new century and suggestions of Xinjiang’s strategies in attracting foreign investment.The studies of this paper mainly focus on three major items. The first part focuses on the characteristics and trend of the international direct investment on the development in new century. The second part focuses on situation and characteristics of foreign direct investment in China at present. The third part focuses on China’s strategy to attract foreign investment. According to the empirical analysis of characteristics and trend of foreign investment in China, we get the following conclusions as below:The foreign direct investment is one of the main fund sources of investment of fixed assets since the30years of China’s reforming and opening up. The rapid expansion of industries invested by foreign capital promotes the industrialized process of our country, optimizes and upgrades the industrial structure, at the same time creates lots of employment opportunities, so as to promote technological progress in domestic enterprises.Recently, with the expansion of FDI, the problems of FDI operation itself and of the competition in cooperation with Chinese enterprises exposed. Firstly, the high level of the inner-fund isomorphic aggravates the imbalanced development of regions and industries. Especially the enlarged difference of east-and-west has already become a hot issue in China’s economic development. Second is the threaten of employment security, the economic losses maybe considerable. Thirdly, the technology spillover is insufficient, which makes Chinese enterprises excessively depend on foreign capital in technological progress and innovation so as to drop in the vicious spiral of "introduce-and-behind". Fourthly, the environment and sustainable development are affected and the development of national brands and industries are restricted. Fifthly, the inflow of FDI and its course of the trade surplus have become one of the main reasons of current "double surplus" appeared in China’s international payments.The Xinjiang government making the positive and effective foreign policy will play an important role not only in strongly promoting the span-type development of social economy and long period of stability in Xinjiang, but also in providing significant experiences for other western provinces in China.