Foreign Direct Investment in China: Some Lessons for Other Countries

February 1, 2002

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Harm Zebregs, and Wanda S Tseng. Foreign Direct Investment in China: Some Lessons for Other Countries, (USA: International Monetary Fund, 2002) accessed March 19, 2025

Disclaimer: This Policy Dicussion Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

China's increasing openness to foreign direct investment (FDI) has contributed importantly to its exceptional growth performance. This paper examines China's experience with FDI and identifies some lessons for other countries. Most of the factors explaining China's success have also been important in attracting FDI to other countries: market size, labor costs, quality of infrastructure, and government policies. FDI has contributed to higher investment and productivity growth, and has created jobs and a dynamic export sector. China's success, however, did not come without some pitfalls: an increasingly complex tax incentive system and growing regional income disparities. Accession to the WTO should broaden China's "opening up" policies and continue FDI's contributions to China's economy in the future.

Subject: Balance of payments, Foreign direct investment, Income tax systems, Infrastructure, Legal support in revenue administration, National accounts, Revenue administration, Tax incentives, Taxes

Keywords: China, Europe, FDI flow, FDI inflow, FDI pattern, FDI policy, FDI regime, Foreign Direct Investment, Further FDI liberalization, Implementing rule, Income tax systems, Infrastructure, Legal support in revenue administration, PDP, Tax incentives

Publication Details

Pages:

26
Volume:

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DOI:

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Issue:

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Series:

Policy Discussion Paper No. 2002/003
Stock No:

PPIEA0032002
ISBN:

9781451974171
ISSN:

1564-5193

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