The implication of Foreign Direct Investments (FDIs) in China's Essay

The implication of Foreign Direct Investments (FDIs) in China's Economy - Essay Example entury, most of the countries in the world used to view FDI as a major threat to the local industries, a factor that led to adoption of liberalized policies that strongly discouraged foreign inflows into their countries (Huang 31). On the other hand, some other countries like China adopted an open door policy that promoted foreign investments, a factor that can be attributed to the intense growth the country’s economy has been experiencing in the past few decades. Many studies have shown that China is currently the major destination of foreign direct investment from many parts of the world. However, Chinese have also been aggressive in making investments in other foreign countries with African region being their major target (Huang 25). This research paper is going to explore the impact of FDIs in Chinese Economy, point out the key determinants of FDIs as well as highlight the future expectation of FDIs in China. Effects of FDI on the recipient countries have been a touchy area of research in commerce, economics and politics (Organisation for Economic Co-operation and Development Staff 56). In this particular area, there are two approaches that are commonly applied namely the macro approach and the micro approach. Macro approach encompasses empirical scrutiny of effects of FDI on the general economic evolution in areas related to creation of employment, business and industry as well as international relationships. On the other hand, micro economic approach focuses on the impacts of FDI on the grass root economy in various sectors like skills development and employment generation specifically establishment of small businesses being highly emphasized on (Huang 40). FDI has helped China a lot in creating good and reliable networks with other major countries and corporates. It has played a major role in creation of employment and enablement of utilization of local resources (Chen 96). Relatively well paying jobs have been created in the country as business