| Past studies of host government policies toward private foreign direct investment indicate that the state in less developed capitalist economies has substantial difficulties avoiding certain negative results of such investment. Such difficulties have been found to result from problems inherent in the dynamic of foreign direct investment, and from domestic politics and class structures. These findings raise the previously untested question: Can a centralized socialist state avoid problems associated with foreign direct investment? This study of foreign direct investment in the People's Republic of China addresses this question.;The thesis first identifies what the leadership believes are potential risks of foreign direct investment. It then examines and assesses the various controls the government has used, including some unique to the socialist state, to guard against the perceived risks.;The thesis finds some successes in China's controls, especially in guaranteeing China significant economic benefits of investment. The successes are due primarily to tools of China's socialist state, and to the incentive of China's domestic market. The thesis also, however, identifies several significant failures. These result from domestic politics, and from external pressures on the state to relax strict controls to attract more foreign capital.;The fact that even a country with both a strong, centralized socialist state and the attraction of a large domestic market faces these problems suggests that most socialist developing countries will have substantial difficulty controlling foreign direct investment.;This study examines the Chinese government's effort from 1979 to mid-1986 both to attract foreign capital in the form of equity joint ventures, and to guard against what it believes are potential risks of joint ventures. The thesis utilizes data obtained from interviews conducted in the P.R.C. and Hong Kong in 1984-85 with Chinese and foreign representatives of joint ventures, and from the Chinese press. |
