Regional Development in China by Wei Yehua Dennis;

Author:Wei, Yehua Dennis;
Language: eng
Format: epub
Publisher: Taylor & Francis Group

Figure 4.4 Provincial distribution of FDI, 1995.

Source: SSB 1996.

Table 4.14 Foreign-invested enterprises in selected provinces, 1995 (US$ million)

Source: SSB 1996.

Table 4.15 Foreign direct investment in SEZs and OCCs (US$ million)

Source: SSB 1992; MFTEC 1994.

Increasing foreign trade is another feature of the post-Mao economy, which is closely related to the development of FDI and FIEs. In 1996, imports and exports of FIEs accounted for 47.3 percent of foreign trade. In terms of regional patterns, the coastal region dominates foreign trade. In 1993, 81.1 percent of China's exports came from the coastal region while those in the central and western regions were only 13.1 percent and 5.8 percent, respectively. Provincial patterns of foreign trade are also spatially uneven (Table 4.16). Guangdong's exports constitute 33.5 percent of China's total, followed by Shanghai (7.1 percent), while in many western provinces, foreign trade was very small.

Several factors have contributed to the leading role of coastal provinces in attracting FDI. First, as I showed in the last section, the central government granted these provinces preferential policies in dealing with foreign investment, currency exchange, and foreign trade. Secondly, these provinces have advantages in location, resources, networks, and local policies. These provinces have locational advantages in foreign investment as well, such as more favorable local policies, more productive economies, a well-developed infrastructure, and a well-trained labor force. They have long-established closer linkages with foreign countries, especially neighboring Asian countries.

Globalization and government policies are important to the growth and distribution of foreign investment. The growth of FDI in China is related to the globalization of economic activities during which FDI has increased at the global scale, including in developing countries. Moreover, the efforts of the central government have also stimulated the growth of FDI in China. Policies towards coastal provinces, especially SEZs and OCCs, have been the most attractive to foreign investors, which have greatly influenced the uneven distribution of FDI in China.

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