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Importance of FDI and Export push to China - Essay Example

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 This paper examines the possible explanation that of foreign direct investment and the export volumes made in China as the direct interpretation to its sustained economic growth. The tremendous growths in the economy of the country are due to foreign direct investment made in the country…
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Importance of FDI and Export push to China
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Importance of FDI and Export push to China

Download file to see previous pages...  Foreign direct investment and the export-push remain important to the economy of China. The foreign direct investment and the export push have played a significant role in making reforms and continuous improvements in both internal and the external economic environments of China. The foreign direct investment in China occurs in joint ventures, cooperative enterprises, and the foreign owned enterprises. From the late 1980s, the China entered into a period of large-scale industrialization and an active reform on the FDI, exports, and domestic market consumption, which form the primary drivers of its economic growth. China has built its economy on matters of exports much faster than the other economic heroes of Asia have. The foreign direct investment is also another very important factor in the economic development of China. There is a good establishment relationship between the foreign direct investment and the international export trade in that the FDI usually follows exports by its logic (Lu and John 2002:312). The huge FDI influx recorded has increased an annual rate of China by more than 10 per cent since 1985 on wards. This has been accountable for the China’s economic growth. The recent studies have reaffirmed the importance of inward foreign direct investment for the sustainable growth in China. The phenomenal growth of the export links and the inward foreign direct investment of China have various indications. The annual total growth within the same span of time was 21 per cent.  China by this time accounted for 0.75 per cent of the world’s export in 1978. The share rose to 3.3 per cent a year later. By 1994, china exported manufactured goods worth 100 billion US dollars clinching the eighth position in the world in terms of production. The foreign direct investment has a direct influence on the export rate of the republic of china. In an isolated case in 1970s, the Chinese republican produced the largest share in the world export market. The country also took the second position in terms of foreign direct investment after the United States. Since 1993, the total FDI of the republic of china has been raising up to 200 billion US dollars, which amounts to 31 per cent of the total FDI in all the developing countries (Chen 2012:397). The share of foreign exports of china increased from negligible amounts in the early 1980s to 20 percent in 1992 then to 41 per cent in 1998. ...Download file to see next pagesRead More
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