Fdi And China's Industrial Structure Optimization

Year 2008 was the first year that China's real GDP per capita has reached US$3000, which means China has entered the later stage of take-off of Rostovian take-off model, and the main task of its economic development would transfer from quantity to quality. The 30-year reform and opening up-policy has brought boost wealth to us, however it also has consumed a large amount of resources and caused to serious pollution issues by its industrial structure. Whether Chinese economy can have sustainable rapid growth majorly depending on if the industry structure optimization can be successfully progressed. As an important factor to influent a nation's industrial structure optimization, foreign direct investment drives up Chinese economic development after 30-year's improvement. As its subject of behavior, multinational corporations own the main portion of the latest technology, global research resources and technology transaction which push the process of Chinese industrial structure optimization. 2010 is the last year of the 11th Five-Year Development Guidelines , which is also a critical year for Chinese economic structure changes. However, the financial crisis also stimulated the difference of foreign direct investment. Therefore, it is meaningful to find out that how foreign investors could promote Chinese industrial structure optimization in the next stage.This assignment is organized by four sections to analysis foreign direct investment and Chinese industrial structure optimization. The main content of the first section is to explain all the relative concepts, briefly state the global research achievements of this issue, and propose drawbacks. For the second section, four time periods which divided by the degree of openness promoted on behalf of important events are used here to explain the process of using foreign capital as well as the industrial restructuring, and to analysis the curt rational industrial structure situation based on the international standard industrial model as a reference. Case study is used in the third part, which mainly analysis the major methods of the influence to Chinese industrial structure optimization by foreign direct investment, such as capital supply and technology improvement. To accelerate Chinese industrial structure optimization, making up the capital and the foreign exchange scarcity and forming a new high quality capital are two main methods on capital supply. For technology improvement, there are three aspects to push the optimize process of Chinese industrial structure, which are technology transaction, technology spillovers, and technology creation. To what extent dose foreign direct investment promote the industrial structure is also determined by the host country's dynamic role, including its industrial structure and capacity of undertake industrial transfer, the industrial linkage between foreign direct investment projects and the host country's existed industrial structure, and the host country's foreign capital policy. Meanwhile, this assignment also state and explain the writer's opinion of some controversial issues, such as whether making up the capital and the foreign exchange scarcity is the reason to attract investments from overseas; the crowd out and crowd in effect of domestic investments by the effects of foreign direct investment; Whether the quit risk of foreign funds exists; and central and local governments dislocate the targets for inviting capitals from overseas.After reviewing the positive effects to Chinese industrial structure optimization by foreign direct investment during the opening-up period, the first part of the forth section is to analysis the new trend of foreign direct investment under current financial crisis and its influence to Chinese industrial structure optimization. There will be a decrease of the quantity of foreign direct investment while it will keep increasing with accelerating of globalization in the long term. Meanwhile, these nations who have stable economic development under the financial crisis, especially China, will be favored by foreign direct investors. In addition, the large amount domestic potential demand and citizens consume structure upgrading should enhance Chinese statues for multinational corporations'direct investment; and also increase the possibilities of those multinational corporations set their regional headquarters in China. Simultaneously, China has a stable increasing investee statue by its higher position of international division of labor. Therefore, it should be a significant issue that how to organize the resources from domestic and overseas to speed Chinese industrial structure optimization. At the very last, this assignment suggests that there are four aspects that could assist the process of Chinese industrial structure optimization by using foreign capital. At the first place, a plan of inviting funds from overseas should be made after China's economic development stage and industrial structure are clearly understood. Secondly, to maximizing the benefits to Chinese industrial structure optimization by foreign capital there should have completed law and regulations; strong financial mechanism and distinctive environment for inviting funds.? Again, by improving the market mechanism, changing government's function and efficiently using foreign investments will promote china's industry structural optimization.?Finally, the expansion of foreign direct investment can be achieved by reasonably guidance for arrangement of corporate foreign direct investment, using industry structural optimization as our final goal.