CHINA AND FDI [chapter]

John Whalley, Xian Xin
2011 China's Integration Into The World Economy  
That China's economy is now deeply integrated into the wider global economy and that inward FDI flows and trade growth have been mechanisms for this integration over the last 15 years is hardly news. The growth of exports, imports, and GDP increasingly reflect FDI inflows. China's deep integration into the global economy must therefore be judged not only by trade growth, but also by capital flows. In the paper we discuss three issues related to FDI, and primarily FDI inflows. The first is their
more » ... The first is their contribution to growth, which we suggest is substantial and if any plateauing of FDI growth occurs then GDP growth may be significantly reduced. We also discuss the links between regional inequality and geographic concentration of FDI. Macro data suggests limited linkage, while micro studies claim to find it. Finally, we discuss recent proposals to remove tax preferences to FDI and RMB revaluation suggesting potential negative effects on FDI inflows. FDI has become so central to Chinese economic performance that what happens on the FDI front in the short term will likely determine the speed of China's development.
doi:10.1142/9789814304795_0001 fatcat:wbdhkqv5v5dezequ5pnhagr4ti