ABSTRACT
China’s economic rise has been one of the most important features of the global economy for the last several decades. One of the most important components in China’s economic opening and reforms that began at the end of the 1970s has been the successive opening of China’s economy to inward foreign direct investment. This opening, it was hoped, would bring not just capital, but also know-how, technology, and management expertise. It was hoped that foreign firms would provide linkages to support China’s exports and outward investments, examples of how world-class businesses operated, and controlled competition that would stimulate improvement on the part of Chinese firms. Over time, these motivations remained and new ones emerged. For example, when China acceded to the World Trade Organization (WTO), it traded greater openness to foreign companies in a wide range of industries for access to international markets.
