FDI Flow And Potentiality In China

In recent years, FDI to China increased sharply. China surpassed U.S.A. and became the largest host country for FDI in 2002. FDI have become one of the most important drivers to Chinese economy. Therefore, the study of the determinants, level and potentiality of FDI to China is very important. It will be helpful for China to receive more FDI.This dissertation deals with the determinants of FDI to China and the FDI level and potentiality of different country to China. Firstly, with the introduction of the center of gravity from physics, this paper studied the economic center, FDI center and population center in China using the data from 1995 to 2002 at provincial level. Secondly, the study use gravity model to analyze the FDI to China on the aspects of home country and the relation between home country and host country with 68 samples. An experienced FDI model was proved to be applicable to the simulation of FDI to China. The study developed two concepts name as Relative potentiality index (RPINDEX) and Potential FDI (PFDI). With the help of these two concepts the study analyzed the FDI level and potentiality of 68 countries/districts. Finally some results and suggestions were concluded.