China Fdi

Without a doubt, the pollution problem in the mainland has reached an extreme serious level. it will lead adverse effect to china’s economy so the economic transformation from secondary sector to tertiary sector must be taken.

The previous slide is suggested that the FDI will obstruct the China’s economic transformation because FDI seems to be more willing focusing on manufacturing industry.

However, there are three factors China should keep relying on FDI.

Firstly, china is the second largest economy in the world, there is a large market for tertiary production, like Tourism and travel related services, Business services and so on. You can see the statistic from world bank 2016, tertiary sector’s value added 50% of GDP and it reflects that there is a big potential development area for the service sector.

Secondly, besides, the increasing demand of tertiary service, China also has mature technology and sufficient high-educated labors (Zou 2014). It also can incentivize the FDI from manufacturing sector transit to tertiary sector        .

Thirdly, the cost of labors and land for manufacture is dramatically increasing. Those are the significant factors to encourage the FDI to distribute on service industry instead of secondary sector. The Recent trend reflects that there are a higher proportion of FDI inflows (about 43%) in tertiary sector in 2013 (World Investment Report 2015: 55).