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International finance: Explain China's emergence as a leading recipient of FDI

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Please be as detailed as possible. How would you explain the fact that China has emerged as a leading recipient of FDI in recent years?

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Solution Summary

The 578 word solution provides good insight into the reasons why China has received so much foreign direct investment (FDI). In addition to the narrative, there is a scholarly article provided for further information.

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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 well. ...

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