Analysis Of Regional Factors For Foreign Direct Investment In China

Since the reform and Open door policy adopted, FDI in China has increased in a fairly high speed. So far, China has became one of the most active countries in absorbing the foreign direct investment(FDI). However,FDI in Chins shows the obvious regional imbalance for gradual implementation of the China's reform and open door policy and other environmental factors. With the changes of regional opening policy and the universal implementation of the preference in foreign investment, the role of the preferences in absorbing foreign investment is weaken. The foreign investment shows to flow to the regions where have the reasonable policies , well-established infrastructure, sound market operating mechanism and large stock of foreign investment. In order to explain the above phenomena, it's important and actual to study the factors which influence the distribution of FDI. Based on the above realization and regional advantages theory of Dunning, the paper analyses the reasons that imbalance of FDI from two aspects. For the qualitative analysis ,we need consider the subjective factors such as investment environment, market factors, cost factors, local government behaviors, policy factors, agglomeration effects and the objective factors such as geographic Location, resource endowment, infrastructure, humane society, regional industrial structure. The qualitative analysis provides the theory to the latter positive test. On the base of the qualitative analysis, the paper states the influences of all kinds of environmental factors in FDI with quantitative analysis. To be specific, the environmental factors include PROP, GOS, TES, OPEN, EDU, WAG, CIT, TRA, AGGL and STR.Then with the econometric model, all above factors are tested to show the relationships. Considered with the theories and results of positive test in the paper, it plays a positive role in reference and learning to provide some relevant policy suggestions and improve the investment environment in all Chinese districts based on the above factors . what's more, the paper emphasizes to analyse some pratical policy suggestions on how to attract FDI in central and western districts.