On the sources of international investment law - Essay Example

And it is in this course that we are to understand economic movements in China today. The "People's Republic of China (PRC) is the world's largest market, with a population of 1.3 billion people and an area about 9,600,000 square kilometers in the southeastern Eurasian continent." 2 Being such, it is no wonder that foreign investors are really gunning to do business with her. Thus, the 1978 Third Plenum of the Eleventh Party Central Committee that discarded the slogan "Take class struggle as the key link" and in its place embraced a shift to socialist modernization that entailed "economic and technical cooperation with other countries"3 has been welcomed with great enthusiasm by foreign investors.

In fact, this " open door policy has been successful in attracting foreign direct investment (fdi)"4 thereby, making China a "new economic power"5 to reckon with. And everything is no easy task. . "Hong Kong provides nearly "60 percent of cumulative FDI, its precise contribution is complicated by round tripping and the routing of FDI from many other countries via Hong Kong, especially overseas Chinese from Hong Kong, Taiwan, and South East Asia. Being such, the important role of Hong Kong in the international trade and foreign investments of China is something that cannot be relegated in the periphery of the economic reforms and development of China.

The status of international trade in China is a result of China's embarking on liberalization coupled with reforms in exchange rates and prices plus decentralization of power. These reforms are made feasible because the government of China has seen that some socialist principles are no longer suitable in meeting the needs of the people. In fact, the restructuring that the Chinese government is working on is geared towards creating a more viable Chinese economy that has for its aim satisfying peoples needs.

But all of these arrived only after China has seen the factors that lead her to her own stagnation in terms of economic development. Eight points6 are raised as the root causes of China's economic retardation. And these are first is the blind adherence to high targets in production and construction with out properly attending to economic results. Second, is the investment on heavy industry so much so that agriculture and light industries are relegated to the periphery of the economy. Third is the focus on new enterprises and capitals while existing enterprises are given minimal support and attention.

Fourth, is overemphasis on the output of primary and intermediate products instead of giving attention to production of