U.S. Direct Investment In China Determinants

Attracting foreign capital is of significance to developing countries, the experience in the world has shown that the international capital is very important to local economy, especially the developing countries, it can be said that foreign capital is one of the driving forces of the skyrocketing of the economy of the countries in its growth phase. In China, the opening policy started in 1978 has caused the significant growth of foreign capital attracted, realizing great achievement. Up to 2010, the direct foreign capital attracted to China has accumulated to almost 500 billion dollar, over other developing countries and areas. US is the important origin for FDI to China, with the multi-national companies as its major forces. The FDI of multi-national companies of US has great impact to the economy in China. This is why the factors influencing the FDI of US multi-national companies to China are chosen as the topic of the paper.According to statistics, in all the countries who directly invest in mainland China, US rank the first in terms of the investment volume and project amount. It can be said, the multi-national companies of US have occupied great percentage compared with those from other countries, which has created very obvious impact. To study the factors influencing the FDI of US multi-national companies to China can not only contribute to the relevant theory, but also offer suggestions to policy-maker, in order to form sound policy to attract more multi-national companies of US to China, and move the economy and technology of China forward.The overall logic of the paper is to study the multi-national companies of US to China based on the literature review, in order to demonstrate what are the major forces to drive the US multi-national companies to invest in China, and then frame the suggestions for policy-makers.The innovation point of the paper is that the deciding factors influencing the US multi-national companies in China in terms of industry structure, investment forms are analyzed systematically. The conclusion of the paper includes:US takes the important role in FDI in terms of both quality and quantity. The initial capital storing amount and policy variables are the driving forces for the FDI of US multi-national companies to China. The significant market scale of China especially after the opening and reform policy is another critical factor; although the recent attractiveness is decreasing, the long-run influence is obvious. The interest rate difference is not a significant factor to FDI from US to China. Although the domestic market and difference in wages have some impact to the FDI to mainland China, its intensity is not strong.