Literature & Language Essay: Position Paper 3 on (CHINA)

Position Paper on China’s FDI
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Position Paper on China’s FDI
Answer 1
Recently, China has succeeded in mobilizing its inward Foreign Direct Investment (FDI), which has played a crucial role in the success of economic development and exportation. Chinese FDI policies have evolved, bolstering the economy of the country. Between January and November 2020, China’s FDI increased by 6.3% to $137.20 billion or CNY 899.38 billion. In November, the country’s FDI increased by 5.5%, which is equivalent to $15 billion (Trading Economics, 2020). November was the eighth month of China’s FDI consecutive growth, which means that the current FDI situation is favorable.
Figure 1: China’s FDI Trend in 2020


Figure 1 above shows China’s FDI in 2020. As indicated in the graph, it is evident that China’s FDI has been increasing for the entire of 2020. In other words, the economic situation of the country is favorable and the country appears to have a strong economy. For example, many American firms, such as Apple Inc., are outsourcing services in China since they are aware of high-quality products that the workforce in the country produces. Due to China’s growth of the domestic market and its sheer size, the country continues to increase its investment opportunities. Over the last ten years, China’s FDI increased by 20%, and the country gained above $100 billion in 2008. In the last half a decade, China’s FDI accounted for about 2.5% of the country’s Gross Domestic Product (GDP) (The World Bank, 2010). If China’s current FDI trend continues, the country will have the largest economy in the world. The most important thing that has helped China’s economy to grow is changing FDI policies. For instance, China opened up to foreign investment in coastal cities by creating industrial parks and special economic zones (Tong, Fung, & Lizaka, 2004). Additionally, China had a radical commitment to liberalization in the accession to the World Trade Organization (WTO).
Answer 2
China promotes and facilitates its FDIs in various ways. They include enhancing the inflow of FDI, performance requirements, formulation of FDI policies, tax incentives, a guiding directory on how industries should open up to foreign investment, an increased supply of cheap labor, promoting infrastructure, and reduced barriers to investment (Long, n.d.). In particular, enhancing the inflow of FDI gives China an opportunity to integrate with the global market, which promotes economic development. Performance requirements enable China to gain benefits related to FDI inflow since all foreign-invested enterprises must comply with the development objectives of the host country. Tax incentives and the guiding directory helps investors to establish their firms in China since they know what to do to benefit maximally (Ng & Tuan, 2001). Currently, China offers cheap labor and many developed countries are willing to outsource their products or services to the country. That way, it creates employment opportunities for its people and the country can bargain on behalf of employees since companies interested in outsourcing their services t...