The Analysis Of The Motivation Factors For Foreign Direct Investment In China

With over 30-year reform and opening-up,China has wide market,abundant natural resources,low-cost labor force,preferential policies,stable social environment.As a result,China attracts great amounts of foreign investments.Foreign direct investment(FDI)provides advanced technology and managerial experience for China's society and economy.Also,it has positive effects on economic growth.In 2014,for the first time,China surpassed the U.S.as the Top 1 FDI inflowing country and attracted 128.5 billion dollars FDI.In recent years,China's economy is in the “New Normal” and the economy condition is transferring from shortage economy to surplus economy.FDI also shows new trends.There exist many problems for China to attract FDI.First of all,the increase of FDI is slowing down and the FDI quality needs improving.Secondly,FDI structures should be optimized.Thirdly,the difference among districts needs reducing.Fourthly,sole investment may cause economy security problem which should put restrictions on.Last but not least,the foreign investors are mostly from Asia.These problems have negative impact on the supply-side reform and our economic development.Therefore,we need to find out the factors which result in the problems and refer to supply-side reform to incubate attracting business environment and to stimulate the foreign direct investment in China.Further,FDI plays an active role to boost China's economy.In this paper,the motivation factors for foreign direct investment in China is analyzed.Through the theoretical overview of domestic and foreign FDI theories,select The Theory of Motivation Factors Combination as the analysis basis.Referring to the Chinese and foreign scholars' study,FDI direct motivation factors and indirect motivation factors are selected to do the analysis.The differences in these motivation factors affect the choices of FDI in the investment quality,industrial structure,location,investment mode,and so on,which further result in the problems for China to attract FDI.Compare the FDI direct motivation factors and indirect factors between different districts or countries to verify the differences in these factors are the trigger for foreign investors to make foreign direct investment and also impact the investment scale,industrial structure,and location choice,etc.Compare the market,labor force,policy,infrastructure construction,investment environment of eastern area,central area,and western area in China,and find the differences in these motivation factors which lead to the variances in FDI.The FDI scale in eastern area is much larger than that in western area.In terms of industrial structure,eastern area attracts more high-end manufacturing and modern services industry,while central and western areas attract labor intensive industries.Compared with India,Vietnam,and Bangladesh,China has advantages on market scale,infrastructure construction,labor force numbers,and labor force qualities.However,the labor cost of China is much more expensive than other three countries',which leads to the outflow of FDI in manufacturing industries.To solve the existing problems of foreign investment in China,we should rely on supply-side reform.Through supply-side reform,increase the technology innovation and process in foreign products,accelerate the industry structural upgrading and transition,and boost institutional innovation.China should make best use of the advantages and bypass the disadvantages to improve the competitiveness and quality of using FDI and also to develop China's economy.