ABSTRACT
China’s export boom has been accompanied by huge inflows of foreign direct investment (FDI) since its opening-up in the late 1970s. As China became the third largest exporting nation ($594 billion) in the world in 2004 from the thirty-second ($18 billion) in 1978, its FDI inflows rose from zero to $61 billion in the same period, with the accumulated FDI being as much as $560 billion by the end of 2004 (Figure 8.1 and Table 8.1). The exports generated by foreign-invested enterprises (FIEs) in 2004 were $339 billion, comprising 57 percent of China’s total exports. What role does FDI play in China’s export expansion? How does FDI affect China’s export performance? This chapter attempts to address the questions.
