Benchmarking China' s Regional FDI Performance

Abstract

FDI (Foreign Direct Investment) has been one of the most important driving forces to a country or to a region. FDI not only provides money, but also has brought business and technical know-how, and has opened overseas sales channels in China. Therefore continued FDI to China and its regions will bring higher economic growth. China has performed very well in attracting FDI at the national level; however, there has been a remarkably unbalanced distribution at the regional level. If providing benchmarks for regional FDI performance and potential for future policy-making has been a priority, a reliable method has been lacking.

This paper proposes a method by redefining the UNCTAD Inward FDI Performance Index and the UNCTAD Inward FDI Potential Index. This paper explores the relationship between introduction of foreign capital and economic development in China. Secondly, we benchmark both regional inward FDI performance and potential in China in 2000-2002. Lastly, this paper offers a matrix of FDI performance and potential in order to classify the regions in China.