The Choice Of Strategy For Foreign Direct Investment In China

The introduction of foreign direct investment (FDI) is a combination of the enterprise behavior and that of the state. Based on the theory of FDI and starting from these two aspects, the essay tries to find out the conditions to make FDI more successful. It first reviews the development in international investment and the current situation, achievements and existing problems in FDI introduction by China ever since the reform and opening-up program was initiated. Since the 3rd plenary session of the 11th National Party Congress, great achievements have been made in China's utilization of FDI with the scale being ever expanded and the level ever enhanced. Meanwhile, we should keep a clear mind toward the side effects caused by the utilization of foreign funds in the current stage, such as the imbalance among regional economies resulting from favorable policy towards foreign capital and the impact on national industries. Thus we should deeply probe into the causes of these problems and make the best economic benefit of foreign funds while curbing the side effects in terms of strategy and policy.While commenting on the FDI theories typical of the western countries, the essay tries to develop the theory to some new extent and points out that effective FDI is conditional upon complementary advantages. So, the strategic choice of China in its utilization of FDI is to strengthen the advantages of the enterprises and those of the state. Theoretical analysis points out that there are two ways to improve the utilization of FDI. In micro terms, we should redouble our efforts in transforming the enterprises to strengthen their advantages in attracting foreign funds. On this basis, we should try to design Sino-foreign joint ventures in the principle of complementary advantages and ensure the realization of these advantages from organization and management. While in macro terms, we should strive to improve the advantages of the state in FDI introduction to make it more competitive and attractive to foreign funds. For this, the essay probes into the favorable elements of the state in attracting foreign funds and evaluates those elements of China accordingly, finding out both the favorable and unfavorable elements with a view to developing the strong points while improving the weak points, thus to seek for the countermeasures to enhance China's capabilities in introducing FDI from the development of particular advantage to the advantages of the state as a whole.Finally, in view of the current situation and existing problems in FDI introduction, the essay advances concrete policy proposals and explores new ways for China to utilize FDI actively, rationally and effectively.