Does Foreign Direct Investment Provide Desirable Development Finance？ The Case of China

Foreign direct investment (FDI) is often considered as a cost-effective and risk-reducing source for development finance. This paper,however,shows that FDI finance often entails underestimated risks and costs. FDI might react sensitively to business cycles and might not be as "permanent" as conventionally believed. FDI might also accelerate other forms of capital flow in times of financial difficulties and,hence,destabilize financial order. In addition to the risks,compensations to FDI and the high import-dependency of FDI-related trade lead to a considerable drain on the balance of payments. Moreover,the reliance on foreign capital for development finance is equivalent to building a Ponzi financing scheme and,therefore,is unsustainable. Given the fact that FDI financing is risky and costly and China does not lack savings,it is suggested in the present paper that China's efforts in attracting FDI should not aim at external capital provisioning.     

Research on Spillover Effect of Foreign Direct Investment

The paper figure out there is potential for significant spillover effects from FDI into host countries. The paper summarizes some of the aggregate evidence of technology and productivity spillovers from FDI, and we focus more closely on the effects of FDI on human capital development in the host countries, both through linkages and various kinds of training, Section 4 is the summarization and conclusion of the paper.     

Exporting National Champions： China＇s Outward Foreign Direct Investment Finance in Comparative Perspective

We examine the extent to which Chinese development banks have financed the globalization of China＇s ＂national champion ＂firms： specifically, through outward foreign direct investment （OFDI）. We create a database of Chinese fnance for OFDI and compare our results to the existing literature and available data on Japan, Korea and other Asian nations. We estimate the total value of China＇s OFDI finance from 2002 to 2012 at US$14Obn. As a percentage of total OFDI, China＇s lending is roughly three times higher than Japan ＇s, the previous global leader in OFDl finance. We identify two major reasons for China＇s high （31 percent） ratio of OFDl lending to total OFDI. First, China has a greater incentive to give OFDI loans than Japan or Korea ever did because its borrowers are statelowned so it can more easily channel funds to targeted areas. Second, China has a greater capacity to give OFDI loans because it has significantly higher savings and foreign exchange reserves than Japan and Korea.     

Attracting Korean Direct Investment, Promoting International Industrial Competitiveness——A Case from China Yangtze River Delta

Korean direct investment in China is growing fast recently with a clear layout directing Yangtze River Delta. Confronted with the characteristics of Korean direct investment, local cities are advised to seize the opportunity, accelerate opening and decrease the overlapped reconstruction and vicious competition in attracting foreign investment. More Korean direct investment should be introduced into Yangtze River Delta to upgrade the industrial structures and promote the international competitiveness of locai industry.     

Has Minority Foreign Investment in China＇s Banks Improved Their Cost Efficiency ？

Since 2001, foreign investors have been permitted to acquire minority ownership stakes m China＇s banks. This paper assesses whether there is any evidence of a cost efficiency payoff m those banks that have taken on foreign investment. Data envelopment analysis isfirst used to generate measures of cost efficiency for China＇s banks over the period 2001-2006. A second stage regression is then performed to determine whether foreign investment has an impact on cost efficiency. The results indicate a positive relationship, although one that is not statistically significant. Policy implications are discussed.     

Foreign Manufacturing Investment in China： The Role of Industrial Agglomeration and Industrial Linkages

This paper investigates the forces that determine the industrial distribution of foreign manufacturing investment. It highlights the importance of industrial agglomeration and industrial linkage in attracting foreign investment to manufacturing industries. Using panel data for two-digit manufacturing industries in Beijing during the period of 1999-2004, this study finds that geographically agglomerated industries with strong intra-industrial linkages are indeed attractive to foreign investment. Previous foreign investment has led to the current industrial concentration or foreign investment. Investors also favor capital-intensive and technology-intensive industries, and they tend to be attracted to the most profitable and exporting industries, but avoid industries with high real labor costs and high entry barriers. Competitive local industries that possess comparative advantages are critical for attracting foreign investment. The existence of industrial clusters certainly enhances a city＇s attractiveness to foreign investment.     

An Analysis of Southeast Asian Firms＇ Investment in China

Economic cooperation between China and Southeast Asian economies is increasingly attracting the attention of policy-makers, scholars, and practitioners. Firms from Southeast Asia have been playing an important role in China‘s utilization of foreign direct investment, though most of these firms have been viewed as small, labor-intensive, and ordinary in technology. This paper reveals one important dimension of economic cooperation between China and Southeast Asia. It investigates the factors that influence Southeast Asian firms‘ investments in Guangdong, which is one of the largest provinces in China in terms of utilization of foreign direct investment, and it tries to answer the question of what make Southeast Asian firms invest in China in a large scale and in the way of advancing waves.T he research outcomes contribute to the knowledge of the changing economic relations between China and Southeast Asia.     

China＇s Outward Direct and Portfolio Investments

This paper analyzes developments and trends related to China's outward direct and financial investments by examining Chinese firms’overseas acquisitions, China's holdings of US Treasury securities, and the recently formally launched Qualified Domestic Institutional Investor programs. Strategies should be developed to reach optimal decisions for both direct and portfolio investments. We argue that China should have a longer‐term view for both direct and portfolio investments, enabling China to become the leader in Asia while maintaining its sustainable growth objective. China should invest heavily in the development of the Asian bond market and the Asian Currency Fund when making both portfolio and direct investment decisions.     

Measuring Net Foreign Assets： The Case of China

This paper discusses two methods of measuring net foreign assets（NFA）： directly using the financial account and indirectly using the current account. The former method is found to be more accurate than the latter method. The paper also includes a detailed discussion of the valuation methodology. The results show that China＇s NFA are much lower than the cumulative current account surplus or the cumulative foreign exchange reserves. This leads to an underestimation of growth in foreign direct investment and an overestimation of the capacity of foreign exchange reserves to cope with possible withdrawals. Therefore, the Chinese Government should pay more attention to valuation issues to obtain more accurate measurement of NFA. Meanwhile, the Chinese monetary authority should relax its control on the foreign exchange settlement system, allow the private sector to hold a certain amount of foreign exchange, and encourage foreign assets to be denominated in RMB to solve structural problems, including entity and currency mismatch     

The Impact of FDI on Developing Countries

I. IntroductionForeign direct investment (FDI) has been one of the defining features of the world economyover the last two decades. It has grown at an unprecedented pace for more than ten years,with only a slight interruption during the recession of the early 1990s. Almost all economiesnow are competing to attract multinational corporations (MNCs). Inward FDI flows havebeen far exceeding private debt flows until recently in some emerging market economies. Interms of geographic distributio…     

FDI对东道国本地投资有挤入效应吗?——基于中国事实的理论分析

FDI进入占中国固定资产投资比重在1979—1998年处于一个逐渐上升的过程,在1998年这一比重超过了10%,1998年以后这一比重开始出现下降。在2008年这一比重仍旧超过1988年的水平。也即1979—2009年期间,FDI进入占中国年度固定资产投资总额的比重经历了先增加后下降的过程,呈现出显著的倒U型变动特征。FDI进入会通过前后向行业之间的联系效应,对中国国有企业(计划型企业)和民营企业(市场型企业)的投资活动产生不同影响。在短期,FDI进入会使得中国国有企业和民营企业投资同时出现下降;在长期,FDI进入会引起中国国有企业投资下降,但对民营企业投资增加有促进作用;随着民营企业投资占中国国内总投资比重提高,FDI占中国年度总投资的比重会出现下降趋势。     

Investigating Chinese Outward Foreign Direct Investments： How Can Firm-level Data Help？

The empirical literature on China＇s outward foreign direct investment mainly relies on aggregate data from official statistics, but the reliability of such data is currently a matter of concern because it does not take account of relevant features such as industry breakdown, ownership structure and entry mode. A novel firm-level database, EMENDATA, compiled by matching data from several available sources on various types of cross-border deals and including information on group structure, provides a more accurate picture and enables new empirical analyses of the rapidly increasing presence of Chinese companies abroad. Based on this database, this paper offers a more precise assessment of the geographical and sector specialization patterns of Chinese outward foreign direct investment into Europe and suggests new avenues for future research.     

China＇s Foreign Trade and Investment： An Overview and Analysis

This study discusses the current development of China‘s trade and investment and their related issues. It presents data consistent with the hypothesis that Chinese firms try, to overcome market impediments, such as capital account inconvertibility and differential tax treatment between foreign and domestic firms, through trade and investment. Various challenges and opportunities related to China‘s future trade and investment are also discussed.     

FDI对我国国内投资的挤入挤出效应:地区差异及动态特征

本文检验了FDI对我国国内投资的影响,实证结果表明FDI对我国国内投资的影响整体上为中性。分地区来看,FDI对我国东部地区和中部地区的国内投资不存在显著的挤入挤出效应,但对西部地区的国内投资存在显著的挤出效应。此外,无论是在全国还是在东、中、西地区、FDI对国内投资的挤出效应均呈现下降趋势,这表明在和外资企业的竞争中国内企业的竞争力相对逐渐增强。     

1840-1936年外国在华直接投资挤出效应研究

自回归分布滞后模型检验的结果表明 ,1 84 0— 1 936年与 1 985— 1 999年外国 (商 )在华直接投资都具有挤出效应 ,前者的挤出程度远高于后者 ,且前者对官僚资本的挤出程度要远大于民族资本 ,而后者则相反。究其原因可知 ,资源寻求型和市场寻求型外国 (商 )在华直接投资是挤出效应普遍存在的外在原因 ,而外国 (商 )在华直接投资效应决定模式的转变则是挤出效应产生巨大差异的内在原因。