Foreign Direct Investment In China's Major Industries And Risk Analysis

As a developing country, China has to open its door to the outside world and introduce foreign direct investment (FDI) in the context of global economic integration. Since its reform, China has achieved great success in the sphere of the employment of FDI: the total annual amount of FDI that China has attracted has been the greatest for seven years among the developing countries and in 2002 it surpassed that of the United States for the first time. FDI to China has largely financed the domestic construction that is in need of funds; and it also has upgraded the quality and competitiveness of Chinese industries. In November 2001, China officially entered WTO to which the former made promises to open its market in five years. Against this background, it is all the more necessary for us to analyze the impact of FDI on China's industries: to what extent has FDI influenced the three major industries of China? What about the pregnable financial industry of China? Are there any risks in the introduction of FDI? etc. The research of this kind is enlightening for and conducive to the economic reality of China, especial after its entry into WTO.The paper is divided into introduction and seven chapters. Introduction briefs on the background of and impetus to this paper; the relevant theories and researches; definitions of some terms concerned; methodology; my creative ideas; logic; and structure of the paper. Chapter One outlines the progress of FDI in China. Chapter Two elaborates on the relations between FDI and economic growth by positive and quantitative analyses and arrives at the conclusion that the impact of FDI has shown differences in density over three major industries. It goes on with the suggestions in terms of policies. Chapter Three, by means of mathematical correlation analysis, illustrates and comments on the effect of FDI on the change of industrial structure. Chapter Four shows the impact of FDI on the competitiveness of China's agricultural sector and suggests the corresponding measures to fully utilizing FDI in the field of China's agricultural industry. Chapter Five focuses on the relation between FDI and China's financial sector. After China's entry into WTO, the financial sector of China is faced with great challenges and golden opportunities as well. The paper mainly discusses the impact of FDI on China's banking sector. Chapter Six analyzes the influence of FDI over the real estate industry of China, pointing out that the intermediary service of realty is much more tremendously affected than the real estate per se. In the second part, it dwells on the impact of FDI on China's tourist industry and the relevant strategies to be taken. Chapter Seven embodies the creative ideas of this paper. It first elaborates and analyzes the impact of FDI over the macro-economy (e.g. its balance of payment; the security of its industries; etc.) of a developing country. Subsequently and logically it discusses the real risks concerning individual industries, several industries and aggregate economy. Finally it touches on the risks of employing FDI after China's entry into WTO and the relevant anti-risk measures.