The Adjustment Of China's Policies Of Foreign Capital And National Capital

Since the reformation and opening, China has accepted increasing foreign capital, which accelerated China' s economy development and social advances. As the economy increases, people' s saving and governmental foreign exchange reserve increase quickly. Now, lack of funds is no longer the major barrier of China' s economy development. So, the traditional policies of foreign capital, which just aids to attract more funds, should be adjusted. We should rely on more national capital in our economy development. But some local governments are so eager for quick economy increase and instant benefits that they over-rely on foreign capital and give them much unreasonably favorable policy, while they discriminate against national capital. This is against the basic theories of economics and the benefits of most of Chinese people, and it is bad to the development of our national economy in the long term. We should take it seriously and adjust it.As China is a socialist developing country and it has the most people in the world, self-reliance is the most important. We must get best use of both the foreign and national resources to assure that our economy development is steady and sustained. Now we have to face two serious problems in our economy development. One is that too much national funds are idle, and the other is that foreign capital is not used properly. So we must adjust the policy of foreign capital, and it is more important to change our national funds into national capital. The aid of adjusting the policies of foreign capital is to get better use of foreign capital. The key to change national funds into national capital is to encourage private investment, which requires a lot of work to do.This thesis can be divided into three parts: the first part is about the currentsituations of foreign and national capital in China, and it emphasizes why the current policies of foreign and national capital should be adjusted and how the economics theories support the adjustment. The second part aids to analyze how to adjust the policies of foreign capital. Firstly, it should be clear that the aid of this adjustment is not to restrict foreign investment in China, but to get better use of it. Then, it provides some specific policy suggestions. The third part, which emphasizes on how to change Chinese private funds into private capital, is the focal point of this paper. At the beginning, it points that so many private funds are idle in China, which means great waste and we must get them used. The best way to use these funds is to change them into private capital. Then it tries to analyze why the change is so difficult now in our country and suggests what should to be done.