ABSTRACT
The huge volume of foreign direct investment (FDI) that has poured into China has been one of the most striking features of the country’s economic transition. The gradual liberalisation of restrictions on foreign investment since 1979 has greatly improved the investment environment. Foreign firms have been attracted by the huge domestic market and pool of relatively well-educated, low-cost labour. Extensive business connections with overseas Chinese in Asia and around the world have also played a role in China’s popularity as an investment destination. Since 1993 China has been the second largest recipient of FDI in the world and the largest recipient of FDI to developing countries, with cumulated inflows totalling US$266 billion by 1998 (SSB 1999).
