This chapter provides an in-depth study of the regional dualistic growth pattern of the Chinese economy and explores factors behind the uneven development between the Eastern and Western regions. It focuses on the discussion of economic structural characteristics and the impact of direct foreign investment and economic openness on regional economic growth and income inequality. The chapter also provides a regression analysis using a time-series and cross-section model, covering 19 provinces for a 12-year period. Foreign investment, through its contribution to domestic capital investment and its positive effects on technology transfer and export growth, has accelerated the economic growth of the Eastern region. Since the early 1980s, direct foreign investment has played increasingly important role in China's capital formation and economic growth. In the reform era since 1979, the Chinese economy has experienced rapid growth and a widening disparity in economic indicators between regions.