Foreign direct investment in China

China has emerged as the most dynamic FDI‐host country in the world, and the impact of FDI on the Chinese economy has burgeoned in ways that no one anticipated. This paper focuses on four issues: (a) the factors behind the FDI boom; (b) how China has succeeded in utilizing FDI so far; (c) China's FDI strategy; and (d) its future development. China's special advantages in attracting and using FDI come from three sources: the huge market with cheap labour, the large number of rich overseas Chinese as investors, and the effective FDI strategy and policy implemented by the central government. Whether or not China will be a winner in future depends on how it balances between technology transfers and domestic market protection.