FDI Promotion Policy in China: Governance and Effectiveness
Linda F.Y. Ng and Chyau Tuan
N steering the Chinese economy from centrally-planned toward a new growth direction under a socialist-market economy, the Chinese central government had, since its economic opening in 1979, established four special economic zones (SEZs) in 1980 and implemented regional investment ‘preferential’ policies on a trial basis. Out of the four SEZs, three are located in Guangdong. Later, following the opening up of 14 Chinese ports and industrial cities in 1984, the Pearl River Delta (PRD) region was opened during 1985–1987.1 Since then, Guangdong, by materialising its leading edge of early opening, has acted as the showroom and the springboard in mobilising foreign direct investment (FDI) to China. For the period of 1979–1997, Guangdong accounted for 35.28 per cent, on the average, of China’s total utilised FDI. In 1997, while utilised FDI in Guangdong in relative terms had decreased to 22.35 per cent of China’s total, Guangdong now still remains to be the province attracting the largest share of FDI in China.
LINDA F.Y. NG and CHYAU TUAN are from the Department of Decision Sciences and Managerial Economics, The Chinese University of Hong Kong. They gratefully acknowledge the funding of this research granted on a competitive basis by the National Science Council, Taiwan, under Project No. NSC86-2418-H-126-002 during 1996–1998. The efforts of Jia Li, research assistant of this funded research project, in participating in the field study in interviewing and collecting data of the sample of joint ventures of this project is especially acknowledged. The four special economic zones are Shenzhen, Zhuhai, Shantou, and Xiamen. The first two are located in the Pearl River Delta (PRD) region and the third in Guangdong. The ‘Little’ PRD (consisting of four cities and twelve counties) and the ‘Large’ PRD (consisting of seven cities and twenty counties) were officiated to...