chapter  15
18 Pages

Openness and China’s Industrial Locations

An Empirical Investigation
WithTing Gao

This chapter examines the factors that may explain the pattern of industrial location in China and the changes, with specific attention to regional openness to trade and foreign direct investment (FDI). International trade and FDI are highly concentrated in China—southeast China conducts most of China's foreign trade and receives the majority of inward FDI. The findings will help to understand China's regional industrial development, and have policy implications for China's regional development strategy. It will also shed useful light on future changes for industrial locations in China as the nation continues to reform itself and become further integrated with the rest of the world. Regional trade and FDI again are found to have had strong positive effects on regional industrial growth over the period of 1985-1993. The evidence indicates that provinces that are more open to trade and FDI also have greater shares of industries, after adjusting for province size.