My China's Inward FDI and its Policy Context has just been published on the Vale Columbia Center website.
China remains the pre-eminent recipient of inward foreign direct investment (IFDI) among
developing countries. FDI flows to the country continued to rise even during and after the
recent global financial and economic crises, when many multinational enterprises (MNEs)
found themselves in difficulties, demonstrating the continuing popularity of China as an
investment destination. Nonetheless, other developing countries, such as Indonesia and
Vietnam, are starting to steal China’s thunder, offering themselves as cheaper alternatives.
Although FDI stock in China reached a new high of US$ 711 billion in 2011, IFDI attraction
is losing its former high priority in the Government’s arsenal of economic policies, especially
as the focus is turned ever more sharply on promoting outward investment. Now that
domestic enterprises have taken over most of the functions provided by foreign investment in
the first two decades of economic reform (i.e., the 1980s and 1990s), IFDI policies are being
concentrated on honing the investment attraction effort to bring in foreign investments
capable of filling gaps in the country’s industrial structure and helping China meet policy
goals such as environmental protection and energy conservation.