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China’s Foreign Investment

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  • Ellen R. McGrattan

Abstract

Foreign investment into China has surged since the 1990s and become a topic of keen interest for both scholars and the media. While China has encouraged this investment with the goal of catching up technologically, close analysis reveals that only a small share of its foreign investment comes from the United States and other nations with the technology China seeks. Instead, inward foreign direct investment flows predominantly from Hong Kong and a few Caribbean nations. Two key factors behind this: China?s tax policy toward foreign investment and its ?industrial? policies to encourage development and growth. Specifically, preferential tax treatment for foreign investment leads many Chinese businesses and households to ?round-trip? investments; and policies requiring joint ventures between Chinese and foreign high-tech companies?while benefiting China enormously?discourage investment by multinationals from advanced countries.

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  • Ellen R. McGrattan, 2016. "China’s Foreign Investment," Economic Policy Paper 16-9, Federal Reserve Bank of Minneapolis.
    • Handle: RePEc:fip:fedmep:16-9
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    References listed on IDEAS

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    1. Thomas J. Holmes & Ellen R. McGrattan & Edward C. Prescott, 2015. "Quid Pro Quo: Technology Capital Transfers for Market Access in China," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 82(3), pages 1154-1193.
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    1. 34. Notable Women researchers on Economics
      by Euro American Association EAAEDS in Euro-American Association: World Development on 2018-10-09 19:52:00

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