ABSTRACT
Introduction The market-oriented economic reforms and ‘opening up’ policies pursued by the Chinese government since 1978 have resulted in high rates of economic growth and a remarkable transformation of the economic structure of the country. During the 1978-1999 period, the Chinese economy grew at an annual average rate of 9.58 per cent,1 ranking China among the fastest growing economies in the world. At the same time there were dramatic increases in foreign direct investment (FDI) into the country. From 1984 to 1999 the annual average rate of growth of FDI inflows was 26 per cent. By the end of 1999, the last year of our study, the total number of FDI projects in China reached 341 062 with a cumulative total of US$305.92 billion invested. According to the OECD (2000), this was equal to 10 per cent of direct investment worldwide and about 30 per cent of the total amount invested for all the developing countries. Given the large inflows of FDI in response to Government policies, a central issue is whether FDI has indeed had a significant impact on China’s economic growth and development.
