What are the most significant factors affecting Foreign Direct Essay

What are the most significant factors affecting Foreign Direct Investment in China - Essay Example China has been a major FDI attraction since it experimented in 1980 and opened up to foreign investment is a few coastal cities and specialized industry parks and economic zones. Since the initial admittance of the first foreign enterprise into China in the early 1980s, the accumulated FDI inflows have reached and outstanding $ 1160.11Billion as of December 2011 . In the early 1992 when Deng was touring in the southern region of china, the quantity of FDI inflows made China become the world’s largest recipient of FDI among the developing nations and the second largest worldwide with the United States taking the lead although China was the leading recipient of FDI worldwide in the year 2002. This move has increased China’s overall economic reforms thus making China more integrated into the world economy which continues to promote the confidence of more foreign investors to attract even more FDI inflows towards China. As the reforms and changes of China’s economic structure have been induced by the large amounts of FDI inflows the evidence is exhibited by the significant changes of comparative advantage in it trade which is continuously increasing in terms of technology intensive, labour intensive and capital intensive productions. As a result, the factor bequest of China has even much stronger complementariness with the world meaning that even more factors influencing FDI in china are increasingly immerging and growing stronger over time (Sheng-xian and Hua 2012). China’s rise into its current position was mainly driven by the foreign direct investors who flocked into the country when it adopted the openness policy to allow FDI inflows into the country and has continued to grow due to its efforts in promoting FDI inflows (Sheng-xian and Hua 2012). This paper covers the most significant factors influencing FDI inflows into China while answering the questions why