Multilateral investment agreement and China's foreign direct investment policies

Abstract

Due to the favorable investment policies offered by the Chinese government since the late 1970’s, the utilization of foreign direct investment (FDI) in China has developed rapidly. However, as a measure to facilitate its accession to the World Trade Organization (WTO), there is growing pressure for China to adjust its present foreign investment regime to international rules and practices. With the rapid growth of worldwide FDI inflows, there is also a growing demand for the adoption of multilateral investment agreements. This paper examines China’s current FDI policies in the context of the newly established rules on investment under the WTO. A more comprehensive multilateral investment agreement that was prepared under the auspices of the Organization for Economic Cooperation and Development (OECD) is also reviewed to examine the implication for the current China’s FDI policies. Some policy suggestions and development strategies are discussed in the conclusion.