ABSTRACT

There is an extensive econometric literature on the impact of foreign investment on China’s economy. This literature is important in that it tends to shape much of the discussion and debate about foreign investment that goes on in policy circles in China and elsewhere. Since this literature is technical in nature, and much of it is in Chinese, it is largely inaccessible to the general international audience. Even so, it is necessary for anyone interested in the impact of foreign investment in China, or in discussions that can influence policy toward foreign investment behind the scenes in China, to understand this literature. In this chapter, we will introduce this literature and report our own econometric analysis of the impact of foreign investment and foreign invested enterprises on China’s economy. We do so because this type of analysis provides additional insights on the role of foreign investment on China’s economy that are not available through other means.