Japanese foreign direct investment in China

  • Dong Hui Wu

    Student thesis: Coursework Masters - CDU

    Abstract

    Foreign direct investment (FDI) has increasingly shown its contribution to economic development in developing countries. This paper examines the situation of Japanese foreign direct investment (JFDI) in China, evaluates the role played by JFDI contributes to China's economic miracle. A review of the theories of FDI confirms the link between these theories and the Heckscher-Ohlin theorem, this leads to the possibility of analysing the activities of JFDI in China through the help of the Heckscher - Ohlin theorem.

    This study explains the interlink between Japan's own economic development and JFDI, confirms the importance of Chinese policies towards FDI. This paper also shows the reasons why Japan recently chose China as her first target for FDI. Furthermore, the contribution of JFDI to China's economic development are
    demonstrated by the effects of JFDI on China's GDP and China's exports to Japan.
    With the application of the Heckscher - Ohlin theorm, some hypotheses came to the conclusion that the main motives of JFDI in China are shortage of labour forme and abundant capital in Japan, they also point out the effect of the yen exchange rate on JFDI. With the tests of trends of JFDI over time, this paper affirms the increasing trend of JFDI in China in the future. This study finally concludes JFDI in China is important and significant to the development of China's economy. It suggest the mutual benefit policy should be encouraged and adopted in the future in dealing with JFDI in both countries.
    Date of AwardDec 1997
    Original languageEnglish
    SupervisorRam Vemuri (Supervisor)

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