Analysis About The Influence Factors Of FDI In China

Since the reform policies were put into practice in 1978, foreign direct investment in China has increased rapid1y. In 2002, China, exceeded the United State first time, became the country who attracted the most foreign direct investment all over the world. Though the amount of foreign direct investment in China is noticeable and the rate of growth is striking, an important problem is that the distribution of realized FDI among China's regions is markedly asymmetrical and that foreign investors have favored the accessible eastern region, especially the traditional industrial centers among coastal cities and the Pearl Delta and Yangtze Delta. Then, another obvious phenomenon is that regional governments offer a wide variety of programs to attracting foreign investment, with tax holidays and other fiscal incentives being the most common type, and range from reducing the fees of using land to the reduction and exemption of enterprise income tax and profit remittance taxes. The choice of a favorable location is important to the success of FDI. In this way, how can regional governments ultimately influence the geography of FDI location in mainland China? Using Correlate analysis, Factor analysis and Regression analysis, we hope to look for the reasons resulting in the differentiations and finally bring out some reciprocal suggestions for the East China and further for the cities in Middle China and West China. The data of the variables come from 110 cities located in 12 eastern provinces in 2002, and the data of FDI comes from the same cities in 2003.(1) We think that the economic market factor, the infrastructure factor and comprehensive environment factors are decisive factors affecting FDI.The indexes of factors affecting FDI don't differ to each other greatly. In another word, they are all very important in attracting FDI. Certainly they still have some differences. The more important indexes are as follows: the amount of save, GDP, the total amount of fixed assets investment, the income of public finance, FDI of the former year, the industry total production, the public finance expenditure, the number of the industry business enterprise, the education investment,the amount of the passengers of bus and trolley and the total population.(2) In order to improve the effectiveness in attracting foreign direct investment, we give following suggestions: firstly, accelerate the growth of economy and take the new-industrialize route; second, provide and improve the establishment and infrastructure for supporting economy development, and actively utilize the respective cluster effects of industry and FDI; third, improve the dependency trade and expand exportation business; fourth, reinforce the education investment, enhance the quality of labor and the ability of innovation.