ABSTRACT
China’s re-integration with the global economy has served it well. By steadily intensifying its trade, investment, and financial links with the global economy, China will be able to benefit from further specialization, increased investment opportunities and higher returns to capital, and a mutually beneficial flow of ideas and knowledge. This chapter describes China’s re-entry into the global economy, including foreign direct investment (FDI) and trade. It explains China’s re-entry into the global financial system, including capital market opening and economic reforms. The chapter also describes China’s participation in the international financial architecture, including the Group of Twenty and international financial institutions. China adopted FDI-friendly policies since 1980, beginning with permitting FDI in Special Economic Zones but steadily broadening it to the rest of the nation. FDI outflows have risen rapidly since inauguration of the “Going Global” policies in the late 1990s, from US$ 1 billion in 2000 to US$ 128 billion in 2016.
