China's Potential for Foreign Direct Investment: An Inclusive Assessment

Running head: INTERNATIONAL BUSINESS ACROSS BORDERS
INTERNATIONAL BUSINESS ACROSS BORDERS
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1INTERNATIONAL BUSINESS ACROSS BORDERS
Executive Summary
China's intensifying position in international trade has attained considerable amount of
importance since its succession in the World Trade Organisation (WTO) in 2001. China's rapid
economic growth has been enhanced by the rapid progress of foreign trade. The exceptional
trade development can be recognized to several factors in particular its profuse labour resource,
major influence of Foreign Direct Investment (FDI) along with trade liberalization. China has
liberalized its products and services in order to align with its plan in the regional trade agreement
(RTA) as well as with its significant commitments towards strategic trade policy which has been
efficiently facilitating to the expansion of the country's economic standard by making it the
second largest financial system in the world. The paper has provided inclusive insights about
China's increasing economic growth along with its existing financial services and foreign
exchange rates which have been facilitating the country to develop as an emerging market for
international trade and commerce. In addition to this a comprehensive PESTLE analysis has
revealed the political, economic, social, technological, environmental as well as legal factors
which are benefiting as well as affecting the economic growth of the country and has further
provided relevant recommendations in order to help China improve its global trade services.

2INTERNATIONAL BUSINESS ACROSS BORDERS
Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................3
Overview of China’s Economy...................................................................................................3
Pestle Analysis.............................................................................................................................5
Strategic trade policies in China for International Trade.............................................................8
Foreign currency and exchange influences on China’s Financial System..................................9
Conclusion.....................................................................................................................................11
References......................................................................................................................................12

3INTERNATIONAL BUSINESS ACROSS BORDERS
Introduction
China is identified to have a remarkable period of significant growth shifting from a
centrally organised to a market based financial system. In recent times China is considered as an
appointment income country comprising multifaceted developmental needs whereby bank or
other financial organisations continue to serve a major developmental role. Reports by Allen and
Gu (2015) have revealed China's rapid economic growth in 7 years with its Gross Domestic
Product GDP to have risen by around 7% in 2017. Furthermore, it is recorded to be the first time
since 2010 that the pace of China's economic growth raised rather than facing reductions (Allen
& Qian, 2014). As a result China's financial system is recognised to be the second largest in the
world. According to Allen and Gu (2015) the growth of China's GDP has brought the country's
economy to around two-third of the dimension of the United States economy last year along with
the current rate which has the propensity to overtake it within the next decade. The purpose of
the following report is to provide an inclusive assessment of China’s potential and opportunity
for Foreign Direct Investment (FDI).
Discussion
Overview of China’s Economy
With a population of around 1.5 billion, China is identified as the second largest financial
system and thus is increasingly playing a decisive role in development as well as in the global
economy (Allen & Qian, 2014). This has led China to be the largest single contributor to world
economy growth since the international financial crisis occurred in 2008. In the view of Wang et
al. (2018), China’s current poverty standard reveals a populace of over 55 billion financially
marginalised section in the rural areas in 2015. However rapid economic ascendance has created
certain challenges which include high level of inequality along with rapid urbanization with