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International Finance: China has emerged as a leading recipient of FDI in recent years

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How would you explain the fact that China has emerged as a leading recipient of foreign direct investment (FDI) in recent years?

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Solution Summary

In a 572 word solution, the response surveyed a number of factors which have contributed to China beginning a leader in foreign direct investment.

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China has become very attractive to FDI in the past decade. Basically I feel there are two factors, one is market factor, and the other one is political factor.

Market factor includes most of the concerns of FDI, so if you consider yourself is a big investor, list out what will be your interests, what will be your concerns, such as ROI, labor cost, and potential market size and so on. Once in 1840's, British business men calculated that if every Chinese man could buy one hat from UK that would make all British hat factories in full-speed operation, be aware that at that time China's population was only 30% of it is now. The population plays an important role in developing countries when we consider their labor cost and market size. And that is also why India is becoming another hot point for FDI as ...

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