While the above definition reflects on what FDI is; the justification for choosing to explore FDI in China is drawn from multiple studies that also explored FDI in China. Evidence from Shan, (2002) suggests that at provincial level, labour quality, market size, average wage, and level of infrastructural development make China attractive. A study that sought to explore FDI determinants, in Guangdong province of China using firm micro-level data Ng and Tuan (2003) found that quota effects, firm size and transaction costs were significant factors for locational choice by foreign investors. The justification for choosing China is also drawn from a research by Fung et al., (2002) which revealed that United States direct investments in China are influenced by local market demand, whereas Hong Kong investments in China are in influenced by labour costs. Fundamentally, a discussion of FDI calls for consideration of globalization because economies are inextricably... ... middle of paper ... ...: University of Nottingham.
11 (3), pp.46 Lin, Z. (2013). VAT replacing business tax: A major tax reform in china. International Tax Journal, 39(2), 17-22,43-44 Wolfers, L., & Ng, C. (2013). VAT reform in China: impact on construction and real estate.
Relevance According to the International Monetary Fund (IMF), World Economic Outlook, advanced economies with deficits will need to compensate for decreases in domestic demand with increases in international exports. Emerging markets such as China and India will compensate by shifting from international markets to their own domestic markets. The IMF has also projected that China will overtake the US economy by 2015 and India is expected to be equal in size to the US economy by 2020 (International Monetary Fund (IMF), 2011). It is clear that the continued expansion of China’s and India’s economies places them as a dominant economic forces that Multinational Enterprises will have to compete with for market share in China, India, emerging markets and domestically. Professor Khanna in his article China + India the Power of Two emphasizes the importance of businesses gaining a competitive advantage by not only looking at China and India as separate countries but by developing business strategies that consider China and India as major trading partners.
Scott, Robert E. “The China Toll.” Economic Policy Institute. 23 Aug. 2012. Web. 8 Dec. 2013. http://www.epi.org/publication/bp345-china-growing-trade-deficit-cost/ U.S. Census Bureau. “Trade in Goods with China.” U.S. International Trade Data.
Presently the Asian economies, particularly the EMEs, depend increasingly on domestic demand (ADB [Asian Development Bank], 2012). Asian economy did not just recover from the global crises rapidly, but also helped to go into a recovery phase. In one of his articles D. K. Das states that, “Asian economy, in particular China, provided the much-needed support to the global recovery. What is beginning to be referred to as the Great Recession would have been deeper and longer without the support of the Asian economy.” (Das, 2011). According to Das, compared to the recovery after the Asian financial crisis (1997-1998),... ... middle of paper ... ...012.687618 Green, S. (2011, April).
its rapid and successful development, China has been exposed under the spotlight all the time. The world economic crisis happened in 2007 not only damaged the economy of America but also the international image. We have seen the vulnerability of American economy and the failing role of taking responsibility for the economic crisis. Simultaneously, as a huge economy, China is the only country recovers in the minimum duration. The recovery of China also contributes to the spring back of regional and global economy.
Economic Roundup Issue 4. Department of the Treasury (Australia). http://www.treasury.gov.au/PublicationsAndMedia/Publications/2012/Economic-Roundup-Issue-4/HTML/article4 Heiduk, G., & McCaleb, A. (2012). China’s competitiveness in international trade: The impact of innovation and human capital – Review of empirical literature.
6 Olga Poluzakova; “Features of China’s Economy and its Prospects”; Page 8. Translated www.rea.ru. Web: Nov. 25, 2012. 7 Rodionova IA The global industry: structural changes and trends (the second half of XX -beginning of XXI centuries. ): Monograph / / Moscow: State Educational Institution MSFU, 2009.
The financial crisis in 2008, having resulted from a tremendous bubble in the real estate market as well as highly leveraged banks and governments, has now become a debt crisis and is still an important in political discussions worldwide. Numerous employees have lost their jobs, many companies went bankrupt; nevertheless, there seemed to be one country that stroke off all difficulties and continued growing at an outstanding rate. In 2009 China’s GDP grew by 9% (www.cia.gov), while all other economies faced severe recessions. For many economists, China is an example for superior economic growth despite state-controlled industries and only limited opening of the market. But recently the number of critics has been increasing and there is much evidence in favour of them.
China’s Emerging Role in Global Outsourcing | China Business Review. Retrieved March 11, 2014, from http://www.chinabusinessreview.com/chinas-emerging-role-in-global-outsourcing/ Zupan, M. A. (2011). Cato Journal - Cato Institute. Retrieved March 10, 2014, from http://object.cato.org/sites/cato.org/files/serials/files/cato-journal/2011/5/cj31n2-1.pdf