Investing in China: joint ventures as the appropriate business medium.

  • Yuwa Wei

Student thesis: Master's Thesis


Since the economic reform started .19 years ago, China's economy has undergone a fundamental economic structural transformation. A highly decentralised and market oriented economy has gradually replaced the central planned economic system. To fulfil its goals of economic reform, modernising the country and building up a market economy, China needs the assistance of foreign capital and technology. Chinese economists have abandoned the self-sufficiency theory and accepted the logic of specialising national production and integrating into international trade in order to increase export earnings. As People's Daily stated: "No country in today's world can develop at a relatively high speed without maintaining contacts with other countries".

Attracting foreign investment has been part of the strategy of seeking out financial support from various foreign sources. In 1979, foreign investors were, for the first time in the PRC's history, allowed to make direct investment through setting up equity joint ventures. Since then foreign investment has increased
steadily through a variety of business means. China has its attractions to foreign investors. For instance, cheap labour, huge domestic market, and rich in natural resources. Moreover, China also offered a number of economic incentives for foreign investors. Thus, it is not an exaggeration to say that China has been a
place catching the eyes of foreign investors.

However, there are concerns and complaints from international investors. Some of the concerns are caused by lack of understanding of the legal and economic environment of today 's China. A study of the Chinese legal framework concerning foreign investment can bring more confidence and predictability to a foreign investor, and, to some extent, reduce investment risk.
Date of Award3 Oct 1998
Original languageEnglish

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