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FDI Up. With Chinese Charateristics.

While the growth may not be as headline-grabbing as those about trade or stock markets, People’s Daily has reported on growth in foreign direct investment (not including financial sector investment) in the first 4 months of the year:

The January to April figures include:

It also noted that 2006 FDI was US$63 billion (not including financial FDI), up from US$60.3 billion in 2005 and US$60.6 billion in 2004.

It is noted that investment in the service sector, including “transportation, computer services, distribution, tourism, architecture and financial services” is increasingly important, and that government policy is guiding investors to wards value-added manufacturing and the developing areas of western China.

The China Economics Blog [1]carries an interesting post that looks at why China attracts so much FDI, despite institutional weaknesses. Quoting a World Bank paper(“Does ‘Good Government’ Draw Foreign Capital? Explaining China’s Exceptional Foreign Direct Investment Inflow”) it notes:

So it is a case “Chinese characteristics” for FDI, as with so many other things. And, as with all things in China, these characteristics are subject to change, especially where government treatment [2]is concerned.

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