ABSTRACT
This chapter concentrates on the changes in China’s FDI policy and the strategic reactions of foreign enterprises with regard to their investment operations in China. The main objective is to capture the dynamic interactions between the FSAs and the strategic reaction of MNEs on the one hand and the LSAs and FDI policy of the Chinese government on the other hand. The chapter consists of five sections. The section on ‘Analytical framework’ presents a framework to analyse the major locational determinants of FDI in China, especially with regard to the market seeking and the scale/specialisation related efficiency seeking FDI activities by EU MNEs. The section on ‘China’s specific location advantages and their impact on EUDI’ reviews the main changes in the Chinese LSAs, especially with regard to China’s industrial policy and the ongoing transition process of the Chinese economy. The impact of LSAs on the changing investment patterns of EU MNEs in China is also focused upon. FDI policy and the relevant regulatory measures of the Chinese government towards MNEs are examined in the section on ‘Chinese FDI policy’. Specific attention is given to the gradual liberalisation of the access to the Chinese market, both in terms of the accessibility of different regions and sectors. In the sections on ‘Reform of Chinese SOEs and opportunities for European MNEs’ and ‘Recent developments’, the challenges and opportunities that are related to the recent changes of the Chinese business environment in general and FDI policy in particular are studied, especially with regard to the so-called Western Development Strategy and China’s entry into the World Trade Organisation (WTO).
