ABSTRACT
INTRODUCTION In this chapter the evolution and patterns of the inward and outward foreign direct investment (FDI) of China will be examined in the framework of Dunning’s investment development path (IDP) (1981, 1986, 1993). The main objective is to capture the dynamic changes in the OLI (Ownership, Location and Internalization) variables of China and their interaction with the Chinese economic development during the last 15 years. The chapter consists of three parts. The first part states the position and growth of Chinese inward and outward FDI, while the second part emphasizes the changing pattern of the OLI configuration of China and the role of the Chinese government in creating new capabilities and stimulating the competitiveness of their international investment link-ups and initiatives. The dynamic interaction between inward and outward FDI is examined, in particular with regard to the sequential development of different Chinese regions as a gradual process in upgrading China’s IDP. Attention is also given to some specific features of the Chinese outward FDI operations, e.g. the rapid ‘take-off’ in the internationalization process and the high concentration in ‘upstream’ countries. In the third part, the impact of FDI on China’s global economic development process is analysed, particularly with regard to the contribution to capital formation, technology accumulation and integration within the world economy.
