| Since 1978, the Chinese policy makers faced the dilemma of controlling multinational corporations (MNCs) and maximizing the economic benefit from foreign direct investment (FDI). Rich natural resources, cheap labor, a huge domestic market and unique political structure created during China's economic reform (1978-present) have enabled China to wield extraordinary bargaining power in controlling MNCs. However, a restrictive policy did not serve China's purpose of importing advanced technology. The majority of early investors turned out to be labor-intensive firms. In order to attract high-tech MNCs, China began to liberalize its foreign investment policy. As a result, China's investment environment has changed from restrictive to more liberal and China has benefited economically from FDI. This study examines Chinese governmental policy and its impact on the structure and pattern of foreign direct investment. |
