An evaluation of the three periods of China's FDI development: 1978-2000
This thesis explores the impact of the fundamental changes in China's FDI related policy, on the development of Western inward FDI in the country. To achieve this, this study, first of all, establishes a definition of the fundamental changes, then divide FDI in China into the different development periods based on the definition, and finally evaluate the fundamental changes in terms of why and how they take place, and what their impact is on FDI development periods. The research covers the duration from 1978 until 2000, when FDI in China experiences three different periods led by three fundamental policy changes respectively: (a) in 1978, China made a historical decision: permitting western FDI to the country, to replace its long-pursued traditional strategy of "self-reliance"; (b) in 1986, China started to adopt a new approach to deal with western FDI, which is promoting FDI, instead of permitting it; and (c) from 1995, the Chinese government adjusted FDI policies according to its economic development strategies and international practice. This shift indicated that China moved from FDI promotion to FDI management. Each fundamental policy change brings China into a particular FDI development period. Looking at these three fundamental changes together, the shift from one change to the next, would provide an overall and consistent picture of China's FDI development periods between 1978 and 2000. In addition, this research explores the root cause for three fundamental policy changes by looking at China's approach to western FDI. The Chinese special approach to FDI is discussed by comparing it with the world generally accepted approaches to FDI in terms of: (a) What is FDI - a definition of FDI. In this section, the world dominant definition of FDI is reviewed and discussed, and China's view on defining FDI is introduced; (b) Why does FDI take place - the theory of FDI. In this part, established FDI theories are examined, ranging from Marxist approach, and the Neoclassical Paradigm, to generally accepted theories of FDI, including Theory of Monopolistic Advantages, Theory of Product Cycle, Kiyoshi Kojima Thesis of Japanese Model of FDI, The Internalisation Theory, and Eclectic Theory of International Production; China's explanation for western FDI in China is given; and (c) How does FDI take place - the form of FDI. This section reviews the worldwide principal forms of FDI, and then looks at how the form of FDI is developed in the country. Moreover, the relationship between the movement of different periods of China's FDI and the development of China's approach to FDI practice is examined. This thesis therefore concludes that it is Chinese special approach to western FDI which generates fundamental changes of China's FDI policies, then turns FDI in China from one period to the next.
HD Industries. Land use. Labor, HG Finance
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