ABSTRACT
Viewing the current world economic statistics it is easy to forget that China only opened its economy to the world market and foreign investment in the 1970s. Ever since the adoption of the Open Door Policy, China has become the most attractive foreign direct investment (FDI) destination in the world.1 In 2005, China’s inward FDI amounted to US$72.4 billion, up 19.42% over that of 2004.2 This fi gure made China the third largest FDI recipient in the world, following the UK (US$165 billion) and the United States (US$99 billion; UNCTAD, 2006). FDI has been important for China’s economy to overcome shortage of domestic funds in the beginning of the reform period. In addition, it is trusted as a means to readjust China’s management practise, improve the economy’s productivity and competitiveness, create job opportunities and increase exports in exchange of foreign currencies.
