An Analysis Of China's Investment Development Path

China has achieved a huge success in attracting FDI since its open and reform in 1979. Since the year of 1992, China has ranked second in the list of recipients of FDI in the world, following the United States of America, and became the largest host country among the developing countries. Meanwhile China has played a more and more important role in the capital export of the whole world. However, as the other side of FDI, outward direct Investment seems receive not enough emphasis as compared to inward direct investment. To be emphasized, Inward Direct Investment and Outward Direct Investment are both the inseparable parts to a country's economy. In case of imbalance, it will affect the economy seriously. In this paper, the evolution and patterns of the inward and outward foreign direct investment of China will be examined in the framework of Investment Development Path (IDP).The analytical framework used in the investment development path is that of The Eclectic Paradigm, which will be used throughout the subsequent discussion for FDI in China. The main objective is to capture the dynamic changes in the OLI(ownership, location and internalization)variable of China and their reflection in the position and growth of Chinese inward and outward FDI. This thesis shows that the empirical data of China's net outward investment basically corresponds with Dunning's theory of IDP. The u-curve appears in the relationship between China's net outward investment and GDP. According to the theory and our empirical research, we deduce that China is now in the starting point of the Third Stage of IDP and the outward FDI in China would increase substantially in the next 5-10 years. Based on the above conclusion, attention is also given to the making the strategies of FDI in future decade.