The Economic and Social Influences of FDI in China

Abstract

China’s opening up has three key objectives: attracting foreign investment, promoting foreign trade, and introducing advanced technologies, skills and management techniques.¹ Of these, attracting FDI is probably the most dramatic manifestation of China’s opening up, and it also significantly affects the other two objectives. FDI brings new technologies, new management techniques, foreign people with different values and cultural backgrounds, and foreign ways of doing business, into China. It increasingly exposes the Chinese economy to international competition. More importantly, as China opens its door to foreign capital and people, the Chinese society is increasingly influenced by foreign values, ideologies and cultures. The economic and social influences of FDI, and the perception and selective acceptance (or rejection) by the Chinese people and Chinese leaders of such influences, will inevitably be reflected in the future policies and regulations for FDI in China, and in the quality of China’s soft environment for FDI in general.