Foreign Direct Investment In China Changes, Effects And Countermeasures Analysis

China's foreign direct investment (FDI) has been growing very fast since China began its open-door policy in the late 1970s. In terms of the trends of its development, FDI has entered a period of stable development after its initial phases of experimentation in the 1980s and quick development in the 1990s. It has been playing an increasingly important role in the Chinese economic growth. On one hand, FDI and its invested enterprises have gradually become increasingly important sources of China's capital forming and industrial output for propelling foreign export, optimizing export structure, promoting technological progress and industrial upgrade. On the other hand, FDI has enhanced factor productivity by its spillovers, which have complementarity with human capital and market-oriented reform, so that it has also indirectly promoted economic growth.With China's entry to WTO, FDI appears new characteristics and development trends. In terms of strategy, the multinational companies in China have gradually tended to be relative independent. M&A (mergers and acquisitions) technique has been adopted. Correspondingly, the relative foreign economic management systems and modes have been greatly changed in China as well, which has been witnessed in market environment and opportunities in China. Meanwhile, the enterprises in China will gain much more opportunities to develop at the same time, but they will face more challenges in a certain period.This thesis first introduces FDI with focusing on conception, form and theories, then analyzes the effects of FDI on economic growth of China based on the background and development conditions of FDI in China, examines the relationship between FDI and economic growth, explores the direct effects of FDI and its spillover effects on factor productivities and economic growth. The utilization of FDI is based on China's economic growth with utilization of international sources, with consideration ofeconomic development and upgrading of economic structure. The limitation of FDI in China and corresponding solving measures are illustrated in this thesis, meanwhile, the restricting factors and relevant strategies of FDI development in China are expounded. Some problems of FDI introduction exist, such as incomplete law system of market economy, the scarcity of effective carriers for FDI, the loss of traditional advantages of introduction of FDI without new competitive advantageous being fostered, etc. The thesis concludes with corresponding development strategies including completing market economic law system, accelerating the performance of M&A, adopting additional preferential polices in the west of China. The effects of FDI on China's economic development can be testified in many fields, especially after China's entry to WTO. The utilization of FDI is not only a general opening-up policy and development strategy, but also a kind of means of following the development trend of the world's economy and participating in the globalization labor division, so that FDI shall be introduced greatly and direct effect and spillover effect shall be fully utilized to keep China's economic growth stable.