An Evaluation On The Quality Of Utilizing FDI In China

After 1990s, foreign direct investment in China has been expanding rapidly. Its impact on China economic and social development has become increasingly significant. The main problem currently facing China is how to improve the quality of foreign direct investment.Based on previous research on the effects of DI and evaluation index system of FDI, the thesis builds a set of evaluation index system to evaluate the quality of utilizing foreign direct investment in China from 1992-2008 in accord with the establishing principles.The evaluation index system selects FDI's effects on economic growth, regional economic development, technology spillovers, industrial restructuring, trade, employment and taxation. Principal component analysis is used to evaluate the quality of foreign direct investment in China during 1992-2008. The results show the quality of utilizing FDI in China increased in 1992-1996, and decreased in 1997-1999. In 200-2003, the quality of utilizing FDI in China showed an upward trend but decreased in 2004-2008.After analyzing the reasons for the changes of the quality of utilizing FDI during 1992-2008 and the main problems of using FDI in China, three suggestions in new economic situation are given as follows: 1. To establish a relatively fair environment for foreign direct investment, coordinate a sustained and balanced economic development; 2. To optimize trade structure and further enhance the quality of employment and tax revenues; 3. To strengthen the technology spillovers and lead the industry-structure- orientation investment to improve the technological level and industrial structure in China.