The Comparison Of The Determinants Of America’s And Japan’s FDI In China

China has attracted lots of FDI from all over the world since China adopted its policy of reform and opening-up. Japan and America are always among the major source countries. According to the distribution of America’s and Japan’s FDI in China, their similarity can be seen, that is their FDI are all largely distributed in the developed eastern coastal provinces. Their difference also can be seen. On the one hand, although their FDI are largely distributed in the eastern coastal provinces, America’s FDI is more likely to distribute in the "Around Bohai Sea Economic Circle" centering Beijing and the "Yangze River Delta" centering Shanghai. While the Japan’s FDI is more likely to distribute in the "Zhujiang River Delta" and the "Bohai Sea Gulf" centering Shandong and Liaoning province. On the other hand, according to the previous study, the motives of America and Japan are different, and America is mainly seeking for China’s large market, while Japan is mainly seeking for China’s cheap labor and resources.The paper starts with the similarity and difference between the distribution of America’s and Japan’s FDI, combining with the foreign direct investment theory and empirical study on determinants of FDI location, then builds the analysis framework of comparing the difference between America’s and Japan’s location determinants. Finally, the paper makes the empirical test, using the time series data from1984to2013and the panel data of10coastal provinces between2003to2013, and brings about some conclusions:(1).Both the analysis of time series data model and panel data model show that market size is an important and positive determinant,as time goes on, its impact on America’s FDI is decreasing, while on Japan’s is increasing.(2).The time series data model shows that labor cost’s impact on America’s and Japan’s FDI turns positive as time goes on. The panel data modle shows that labor cost has an insignificant impact on America’s FDI, while a significantly negtive impact on Japan’s.(3). The analysis of time series data model shows that the agglomeration effect has an increasingly positive impact on the distribution of both the two countries’ FDI, and the panel data model also shows that the agglomeration effect has an positive impact on them.(4). Industrial structure, openness,level of scientific and technological development and land cost have different impacts on the location of America’s and Japan’s FDI at different stages.The empirical analysis shows that when the two countries decide their geographical distribution, their consideration is generally similar, however their focuses are slightly different. In fact, when the FDI from different source countries, in different types and industries are choosing their location, they have different focuses. Therefore, when the governments make their policies to attract FDI, they should differentiate the FDI from different source countries, in different types and industries. Only by this way, the governments can attract more FDI which are beneficial to the local development.