Location Selection Of Foreign Direct Investment In China

International Direct Investment and MNEs play a major role in the economic globalization. International Direct Investment is becoming the main stream of international economic corporation replacing of international trade. FDI(Foreign Direct Investment) has been developing in a high speed in China since China's opening to the world. In 2002, China became the number one on FDI inflow in the world. In FDI inward stock, China is the number one in developing countries, and only next to the USA in the world. But because of China's uneven opening policy and other environmental factors, FDI in China appears obviously regional differences: eastern region occupies 87.84 %, central region 9.09% and west region 3.08% in the actual use of FDI from 1983 to 2002. Now, in the eastern region, FDI is centralizing to the Yangtse River Delta, in 1983, FDI in south coastland, central coastland, north coastland is 73.3 percent, 3.8 percent, 15.8 percent respectively, but by the end of 2002 it becomes 33.0 percent, 32.0 percent and 22.5 percent, and the trend to centralize to the central coastland is becoming more and more obviously.This article will explain the reason why FDI in China is regional lopsided in qualitative and quantitative analysis. In qualitative analysis, the investment environment including infrastructure, market, law, favorable policy, cost, centralizes economy etc., these are the factors that should be considered when choosing an investment location. These factors provide the theory gist for the later quantitative analysis. In quantitative analysis, the article demonstrates the influencing degree of every environmental factors on the decision of FDI. The environmental factors chosen in this article including per Gross Domestic Product (PGDP), per Foreign Direct Investment (PFDI), WAGE, total retail sales of social consumable (SALE), the length of road of every area (ROAD), the export and import ratio of foreign investing enterprises (FTR).Take into account of the ever changing of environmental factors, the research period will be divided into two parts: the first part is from 1992 to 2000, and the second one is from 2001 to now-after china enter into the WTO. According to the result, in the first phase, the factors that influence the decision of FDI location in turn is PFDI WAGE SALE FTR ROAD PGDP; in the second phase, they are PGDP, WAGE, PFDI, FTR, SALE, ROAD. This means that the economic scale (PGDP) become more important, but the influence of the level of foreign invest (PFDI) is weakening.For the central and western region, in order to increase its ratio of FDI inflow, the most important thing is to improve the investment environment. Some policy suggestions will be given for central and west region on how to attract FDI in the last part of this article.