Round-Tripping Foreign Direct Investment in the People's Republic of China: Scale, Causes and Implications
Geng, Xiao | June 2005
Abstract
There is no doubt that part of foreign direct investment (FDI) inflows to the People’s Republic of China (PRC) FDI belongs to the return of Chinese capital that has gone abroad. The World Bank and others have estimated that the scale of this round tripping could be as high as a quarter of the total FDI inflows into the PRC. The prevailing view in much of East and South East Asia is that the PRC has attracted too much of global FDI at the cost of other developing economies. The estimations here indicate that the round-tripping FDI in the PRC is likely to be in the range of 30% to 50% of officially recorded flows, which implies that such concerns are greatly exaggerated. A large part of the capital originally created in PRC has gone abroad and has stayed abroad waiting for opportunities to return to the PRC. The pattern of capital creation and movement suggests that competition for FDI flows is not a zero-sum game. FDI inflows are not simply a fixed sum to be competed away among different countries. Instead, the PRC’s experience shows that FDI inflows are endogenously determined by the capacity of the host countries to create new capital.
Citation
Geng, Xiao. 2005. Round-Tripping Foreign Direct Investment in the People's Republic of China: Scale, Causes and Implications. © Asian Development Bank. http://hdl.handle.net/11540/4054. License: CC BY 3.0 IGO.ISSN
1882-6717
Keywords
Development Economics
Regional Economic Development
Economic Impact
Asian Development Bank
Development
Economic Boom
Regional Economic Integration
Good Governance
Governance Approach
Economic planning
Economic structure
Growth policy
Trade relations
Trade policy
Trade policy
Economic development
Economies in transition
International economy
Border integration
Economic integration
Gross domestic product
Trade policy
Institutional Framework
Public Administration
Business Ethics
Regional economics
Economic forecasting
Economic development projects
Success in business
Business
Free trade
Business
Economics
Communication in economic development
Restraint of trade
International economic integration
Trade blocs
East-West trade
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