Analysis- China’s Utilization of Foreign Capital in 2012.docVIP

Analysis: China?s Utilization of Foreign Capital in 2012 Main factors affecting China?s FDI From the perspective of domestic factors: First, the national economy has ushered in a new stage for development and thus requires more stringent standard for foreign investments. In recent years, the national economy has experienced rapid development with remarkable achievements. As early as 2011, China?s aggregate GDP totaled USD 7.3 trillion, which consolidated China?s status as the world?s second largest economy; with a per capita GDP over USD 5,400 in 2011, China was in the course of entering the high-income country rank from the medium-income countries; China?s foreign exchange reserve exceeded USD 3.18 trillion; the FDI utilized by China rose by nearly 2.5 times to USD 116 billion from USD 46.9 billion in 2001. Undoubtedly, FDI has made great contribution to the domestic economic development, industrial structure upgrading and industrial system construction. However, as China has become stronger in economic power, the “dual gap” at the beginning of the implementation of the reform and opening up policy has changed to “dual surplus” and therefore China has naturally unveiled stricter standards for foreign investments. Attracting foreign investments is not mainly for making up the “dual gap”, but for competing for the highly competitive carriers defining by advanced technologies, management expertise and sound corporate governance system in a bid to serve promotion of technological progress, structural upgrading and institution transition. Second, “mode transformation and structure adjustment” has become a significant topic for domestic economic development, which requires a structural transformation of foreign investments. To adapt to the requirements for transforming economic growth mode and adjusting economic structure, China will continue to encourage foreign investments to go into such industries as high-end manufacturing, new and high technological