A Comparative Study Of China And South Korea Foreign Direct Investment Policy

In economic globalization era, foreign direct investment (FDI) has become an international trend. As FDI in South Korea is ahead of China, study South Korea’s FDI policies carefully can help Chinese government improve FDI policy further. Comparing the FDI policy between South Korea and China will further enrich the theory of foreign investment in the view of newly industrialized countries and developing countries, and will promote the FDI policy in both countries, which has a certain practical significance.Based on the theory and policy of FDI, this paper compared the FDI between South Korea and China, including the comparison on scale of foreign investment, the regional distribution of foreign investment, industrial structure of foreign investment, enterprise structure of foreign investment and so on. The core of this paper is the comparison of FDI policy between South Korea and China, including the comparison on evolution of foreign investment policy, foreign investment approval system, the financial policies of foreign investment, foreign investment insurance system, foreign investment in post-management policy and so on.Due to the different stages of economic development, China and South Korea has differences on the during of foreign investment policies evolution, while both of them experienced three phases:controlled FDI phase, encouraging FDI phase and active promotion of FDI phase. Both Chinese and the South Korean government have provide with many types services on FDI enterprises, such as provided relevant information consulting services, held International Investment and Trade Fair regularly, provided investment staff with overseas training support, signed the Intergovernmental Agreement. Compared with South Korea, China has just started on foreign investment service agencies and consulting services as well as other aspects, China should be actively learning the Korea’s experience. In the view of the comparison on tax policy for foreign investment enterprises, both countries take tax credit instead of a tax sparing policy to the countries who have signed the Prevent Double Taxation Agreement with them. The Deduction method of tax credits is basically same. Both governments have taken positive financial and insurance policies on FDI enterprises, including provide preferential loans for funded foreign legal persons, provide the necessary insurance and so on. In the view of the comparison on FDI post-management policy, South Korean government are more stringent. In recently years, Chinese government has been gradually institutionalized on FDI enterprises post-management. However, compared with South Korea, it till needs further improvement.