Researches In The Development Of Foreign Direct Investment Under The GSP Treatment

Introduction of the Author: Gao Mei-Hua, Was born on Jan, 20th, 1964. Under the guidance of Prof. Sun Jian. She will be awarded the Master of economy at Ocean University of China in Auguest, 2003. Now, she is continuing her research work in the field of investment.The Generalized System of Preference (GSP) is a system that the developed countries give reduction or exemption of customs duty on the basis of MFN tariff rate when they import products from the preference receiving countries. The GSP tariff rate is the lowest tariff rate in the international trade.The GSP aims to help the developing countries increase their export income, promote their industrialization and accelerate their national economy.Until 1978 China began to enjoy GSP treatment. The practice has proved that the GSP treatment is benefit to China to attract the foreign direct lnvestment and increase their export income.The GSP are based on an exception to the usual rules of the WTO. China joined the WTO with the qualifications of developing country. It means that China is still a beneficiary country. Now the products made in China enjoy GSP treatment in 29 developed countries.Foreign direct investment is a kind of capital circulation. It means that the investors of a country (area) invest in enterprises abroad and control their operation and management. By foreign direct investment the capital is as medium to make the factor realigned worldwide.The GSP is the important factor of attracting the foreign direct investment. Now only few preference-giving countries give Korea, Singapore, Hong Kong, Taiwan GSP treatment, so the investors from the above countries (areas) and the Western countries invest in China one after another.Because the GSP treatment of developing countries are different from that of the least-developed countries, some enterprises of China should invest in the least-developed countries to produce the products and enjoy GSP treatment of the least-developed countries.When inviting outside investment the department concerned should give wide publicity to GSP policies. When the investors of China invest abroad, they should investigate the GSP treatment of the concerned country and promote much more products to export to developed countries by making full use of GSP treatment.