Analysis of China's Political Economy for Foreign Direct Investment

Running Head: GLOBALISATION
Globalisation
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1GLOBALISATION
Executive Summary
Foreign Direct Investment refers to the inflow of capital from a foreign country to the domestic
country. The investment is made in such a way that it benefits both the investor and investing
country. The internal economic environment of a nation plays a crucial role in determining FDI
flows. The report has selected China to analyze its political economy from political, economic
and legal contexts. For this, proper data has been collected to critically discuss about
attractiveness for foreign direct investment to this country.

2GLOBALISATION
Table of Contents
1.Introduction...................................................................................................................................3
2. Political Economic Analysis........................................................................................................3
2.1 Political System.....................................................................................................................5
2.2 Economic System..................................................................................................................5
2.3 Legal System.........................................................................................................................9
3. Recommendation:......................................................................................................................10
4. Conclusion:................................................................................................................................10
5. Reference List............................................................................................................................11

3GLOBALISATION
1.Introduction
The paper aims to discuss attractiveness of China as a destination of foreign funds
outflowed from Australia. The flawless growth of China in the past last few decades holds an
important place in economic development of modern world. In the last thirty years, China has
accounted a GDP growth close to 9.5% (worldbank.org, 2018). In fact, in terms of GDP China is
now considered as the fourth largest economy in world.
There are several factors that makes the nation attractive for FDI. With its unprecedented
growth experience for a considerably long period China overtook USA as the largest recipient of
foreign fund. The existing large amount of capital can attract other countries to invest more
capital in the developing nation. China’s attractiveness towards foreign funds also rests on rapid
development infrastructure, availability of resources, productivity and skills of workers and
business value chain. Favorable regulatory environment, economic and political stability,
business environment and trade openness are other factors contributing to growing foreign
investment in China (Holmes et al., 2016).
The report analyzes political economic environment of China. The benefits, risks and cost
associated with political, economic and legal system are discussed with reference to empirical
evidences.
2. Political Economic Analysis
Political economy discusses about production and trade along with their links with
government, custom and law for a country (Frieden & Eichengreen, 2018). Moreover, this theory
discusses on distribution of wealth and national income.
China is experiencing a huge change in its political, economic and legal ground and
through these changes; each factor has helped others to become strong (Malesky & London,
2014). Thus, China has obtained huge significance in world economy by transforming and
industrializing itself to grow rapidly and extensively.
Country: China
Political Economy
Analysis
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