A Study On The Determinants Of The Location Choice Of Foreign Direct Investment In China After The Financial Crisis

Foreign direct investment has made significant contributions to China’s economic development for three decades since the reform and opening up policy. But according to the whole situation of the foreign direct investment in China before the financial crisis, foreign direct investment are mainly invested in the developed eastern coastal provinces and municipalities, and concentrated in labor-intensive industries such as processing and assembly industry. Although it plays an important role in the economic development of the eastern region, and creats a lot of employment opportunities, FDI also widens the economic development gap between eastern, central and western district, plus its help for the development of China’s high-tech industry is not enough.The global financial crisis created serious surge in financial market and increased capital market volatility, foreign direct investment in China has entered a new stage since then.Conforming to the trend of current global economic recovery and China’s economic development with structural adjustment, industrial upgrading is imminent, we should give full consideration that how to use the foreign direct investment in China more efficiently, promote foreign investment equilibrium distribution between different regions of China, the reasonable distribution of various industries and our country development of high-tech industries is an issue that we should seriously think it over.Given that, we should study the determinants of aiming zone selection for foreign direct investment in China, directed the foreign direct investment more effectively to promote China’s economic development.First, this paper summarizes the scholars’researches and studies about foreign direct investment for location selection. Then the study made deep analysis of the condition regarding foreign direct investment choice of location and industries. Third, this article analyzed the determinants and its mechanism of location selection of foreign direct investment in China after the financial crisis through three levels of the enterprise of foreign direct investment in China’s own factors, policy factors, and external environmental factors, and tested the rationality of those various influencing factors using case studies and econometric model.The financial crisis has brought the global capital markets enormous fluctuations, China’s foreign direct investment, although experienced slight turbulence, develops overall steady.However, foreign direct investment in China still mainly concentrated in the economically developed eastern provinces, municipalities. Foreign direct investment in eastern, central and western region still remains significant gap. The proportion of hi-tech-added foreign direct investment also needs to be improved. In the future, to balance the development of China’s economy and narrow the gap between regional economic development, meet industrial structure adjustment requirements of economic development, we should look deep into various determinants of location selection for foreign direct investment in China and the mechanisms correctly, efficiently guide the flow of foreign investment, encourage them flow into the key industries of economic reforms, and promote foreign direct investment in China to make greater contributions to our long-term sustainable economic development.