How Different Location Determinations Aftect FDI In West And East China

Since the reform and opening, especially from the 1990s, the Foreign Direct Investment (FDI) has began to accelerate its pace in the up-going market—China. Many researches indicate that FDI promote the economy. Government lays down all kinds of preferential policies to active FDI. But FDI in China appears a huge imbalance in regional distribution. And this really destroys the coordinated development of China. Differences in the endowment of economy in East China and West China are the main reasons for the imbalance of FDI.According to the foreign direct investment theory and the geography theory, the article analyzes the present situation of FDI in West China. As for the situation analysis, the article analyzes mainly from the efficiency of using FDI, industrial structure and potential of FDI. The conclusion is as following:East China excelled in efficiency and potential of FDI. With the analysis of panel data model, the conclusion indicates that West China should pay more attention to the following factors:market scale, infrastructures, opening of economic, accumulative effect of FDI and policy. Based on the panel data analysis, the article further compares the industrial structure of FDI in East China and West China. The conclusion reflects that raw material advantages and the cheap labor costs are the determining factors for West China. From the industry-specific analysis of the impact of FDI in the West, the results show that raw material advantages and cheap labor costs are the two primary determinants.With China's industrial transfer policy, the Attract of FDI in West China will be of strategic importance. Based on the analysis, several suggestions are made to improve the FDI in West China, including construction of infrastructures, perfecting of market mechanism, opening of economic, enhancing of government efficiency. These factors will boost the inflowing of FDI to West China.