Foreign Direct Investment in China: Issues and Challenges

The case is about the rise of China as the top recipient of FDI in the world with the adoption of the policy of economic transformation. China has moved away from an almost isolated centrally planned economy toward a market-oriented system that has made the country an attractive investment destination for multinational corporations. Accelerated economic reform initiatives and the aggressive opening up of the Chinese economy under the leadership of Deng Xiaoping resulted in a noticeable surge in foreign capital inflow into the country.

The case outlines the conditions that led to the story of huge inflow of FDI into China, the effect of FDI, and the issues and challenges confronting FDI in the country. It explores the diversified dimensions of the occurrence of FDI and encourages students to find out country specific macro and firm specific micro factors that attract FDI. It will help the students analyze the reasons for the massive inflow of FDI into the country and the policy measures undertaken by the government to sustain the trend of incoming FDI for the future decades to come. .