The impact of inward foreign direct investment on the nature and intensity of Chinese manufacturing exports

Using data for the period 1983-2002, this study examines the relationship between inward foreign direct investment (FDI) and export performance in China. The results indicate that FDI promotes exports by foreign as well as domestically-owned firms, and that this effect is strongest for labour-intensive industries. This impact, however, does not depend on the country of origin of the investor. This finding contradicts previous results that showed that western transnational corporations (TNCs) were significantly less export-oriented than the affiliates of TNCs from other economies, suggesting that western TNCs in China have become more export-oriented in recent years. The finding that the relationship between FDI and exports is not influenced by the country of origin underscores the timeliness of the elimination of the discriminatory policy of China towards foreign investors.