ChinaFDI and Economic Growth.ppt

ChinaFDI and Economic Growth Dr. Wi Saeng Kim Hofstra University 4/25/07 China1. Economic growth2. FDI inflows3. Impacts on global economy4. Imports5. Energy consumption6. Steel production7. Capital outflows FDI:Fountainhead of China’s Economic Growth China has grown rapidly over the last 25 years from a very low income level. Average annual GDP growth 1980-2002: 9.5 percent Per capita GDP rose from about $300 in 1980 to $1000 in 2002 Output = ? (capital, labor) FDI brought in the capital and technology Capital financing →foreign debt →Foreign direct investment China selected FDI World GDP Ranking in 2005 FDI inflows to China, 1990-2005 Inward FDI stock as a percentage of Gross Domestic Product Inward FDI Flows, by Economy Inward FDI Flows, by Economy Japanese direct investment flow into China, 1996-99 US stock and flow of direct investment to China, 1996-99 FDI in China, By region Inward FDI flows as a percentage of Gross Fixed Capital Formation Imports Ranking by countries China’s market share in G-3imports from china divided by total imports  80 90 00 01 02 Japan 3.1 5.1 14.5 16.6 18.3 US 0.5 3.2 8.6 9.3 11.1 EU 0.7 2.0 6.2 6.7 7.4 Current account balance, in 2005 Energy Consumption World Steel Production Source: IISI World Steel Consumption Source: IISI Capital outflow from ChinaFDI outflow Ranked by total value of investment during 1979-2003 Source: Ministry of Commerce Foreign Holdings of U.S. long-term debt securities (as of 2006, $Millions) Marketable U.S. Treasury 84 89 94 00 02 03 04 05 foreign holdings % 13.5 22 19.4 35.2 40.7 45.5 50.8 51.7  Capital flow cycleChina receives FDI (capital and skills)→economic growth→commodity consumption  →imports increase→surplus of trade balance→in