Sample Term Paper

Foreign Investment in China

China has one of the largest and fastest growing economies in the world with a nominal GDP of $4.3 trillion and an annual GDP growth rate of 10%. China has made huge progress since the early 80s and is still growing at a rapid rate. The growth pattern of the country started changing when the economic reforms began to be implemented since 1978.

The Chinese Government now focuses more on Foreign Direct Investment than ever before and the three options available to the foreign firms are Equity Joint Ventures, Co-operative Joint Ventures and Wholly Foreign Owned Enterprises. Under these three systems the Government encourages the Joint Ventures option (Tian, 2007). The cost of doing business in China is quite low as compared to other countries due to lower cost of labor.  The currency control standards and the added emphasis on protection of private businesses encourage foreign investment in the country. The country also offers subsidies in various industries in the form of lowered taxes, electricity and other areas. The political environment of the country is quite stable, although the country is a democratic communist republic but the environment is much better than that of India.

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