Institutions and Investments
Foreign Direct Investment in China during an Era of Reforms
Provides an in-depth look at how China's financial institutions interact with foreign investment
As China continues to be heralded as a rising economic power, the need for an understanding of its institutional effects—such as investment-related policies, regulations, and laws—on foreign direct investment increases as well. Institutions and Investments employs interdisciplinary perspectives from economics, business, law, and political science to shed light on the interaction between institutional changes and investment patterns and to form a clear picture of investment behavior as China's legal and regulatory infrastructure has developed over the reform years.
Organized into three main parts, the book first discusses the evolution and nature of China's FDI regulatory framework. Part 2 examines the various modes and variant patterns of FDI in China in the reform years. Part 3's central task is to demonstrate a systematic link between institutional changes in China's FDI regulatory framework and the changing patterns of FDI. In conclusion, Jun Fu finds that China has made substantial progress from a command economy to a market system, but that it still has a long way to go before it truly attains a transparent and rule-based system.
This book adds new dimensions to the scholarship on China as a growing economic power and will be of particular interest to international economists, political scientists, and business scholars studying China.
Praise / Awards
"Jun Fu examines the causes of foreign direct investment in China. China has attracted massive amounts of foreign capital in the past twenty years, and this capital has gone to different parts of the country. The most commonly held views are that this remarkable surge in investment is due to culture, especially since many of the investors are of Chinese origin, or to purely economic factors. While Institutions and Investments does not deny the role of these considerations, it does argue that a full understanding requires analysis of the institutional characteristics of the Chinese political economy.
"Drawing on the growing literature on the interplay of economic and political institutions, Jun Fu shows how domestic (and regional) institutional variables have systematic effects on the incentives to foreign investors. The result is a careful, nuanced, rigorous study that brings the best in modern social science to the examination of the political economy of the world's largest country. It will be of interest to scholars, policymakers, and business executives who want to understand China's growing integration into the world economy."
—Jeffry Frieden, Harvard University
"In this book, Jun Fu provides one of the most balanced and thoughtful surveys of the magnitude and nature of foreign investment in mainland China. The book will provide a cornerstone to future research into economic change in the region."
—Robert H. Bates, Harvard University Economics
"Overall this is an excellent study. It provides a solid core of data and much information on the evolution of policy, law and institutions."
—Christopher Howe, China Quarterly, 2001
Table of Contents
List of Maps, Tables, and Figures-vii
Introduction and Synopsis-1
Part 1: Institutions
1. Evolution of China's FDI Regulatory Framework-25
2. International Perspectives-63
Part 2: Investments
3. Principal Modes of FDI in China-95
4. Trends and Patterns of FDI-119
Part 3: Evidence
5. Politics of Taxation and High Demand for FDI-165
6. Institutions Matter-193
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