A Study On China's Utilization Of Foreign Investment Through Capital Market

Since the Open Policy was launched in China, the utilization of foreign investment has been concerned and studied by theorist and practitioners. It is because that the distinguishing achievements that China has gained in absorbing foreign capital have been playing an important role in the development of China's economy. In recent years, however, the flow of foreign investment in China is going decreasing. One of the most important reasons is that the way we are now absorbing foreign capital doesn't match the way that international capital flows.In the previous two decades, with the process of unification of world economy and the relaxation of financial controls, financial freedom and globalization has been a worldwide overwhelming trend. Capital market, the significant component of modern system of market economy, is increasingly taking the important role in the world economy. In such a context, the author of this dissertation maintains that the present way of absorbing capitals in China should match the international situation. While keeping on the traditional way of utilizing foreign capital, China should enlarge the scope of absorbing capital by financing in both internal and external capital markets, and promote the effectiveness of absorbing capital as well, so that the utilization of foreign capital could be on a new platform.This dissertation mainly focuses on the problem of utilization of foreign investment through capital market in China. The whole dissertation is divided into four parts.Part I: the author first introduces the theory of the necessity for utilization of foreign investment and the theory of the developing stages of utilizing foreign investment, then analyses each stages of the utilization of foreign investment in China, especially illustrates the present stage. Finally, the author analyses the problem of the "twofold extravasations" existing in the process of present capital utilizing.Part II: in this part, the author analysis the present situation that China opens its capital market to the world, exploring the problems existing in the internationalizing process of China's capital market. The objective actuality of the unification of world economy and the flow in large scale of international capital, together with the fact that China join in WTO, has been fostering China to open its capital market and to strengthen the utilization of foreign capital through capital market. The author also illustrates the influences resulting from absorbing capital with large scale.Part III: the author illustrates the reasons that the developing countries utilize foreign capital by opening capital market, and also points out that thecapital flow is a sword with two blades. Capital flow has its active significance, while it also takes hazard to the national economy. In this part, the author illustrates, both theoretically and positively, the ventures that we may meet in the process of opening capital market. Through the introduction and analysis on some cases, the author hopes to put forward some basis for the opening of the capital market in China.Part TV: this part is a study on the strategies of opening capital market. China's capital market plays an important role in the economic development and reformation. Based on the analysis of China's present conditions for opening capital market, the author puts forward the principle of "active and piecemeal opening", and the procedure framework for the opening of China's capital market.