Effect of FDI on Chinas Technological Status Essay

Effect of FDI on Chinas Technological Status - Essay Example The researcher states that China is an emerging economy and has continued to experience great economic success starting about thirty years ago when the country achieved economic liberalization. China has successfully participated in trade and investments at the global level, thus is well integrated into the economy at the global level. Most importantly, the FDI inflows in China today are considerably high and the many foreign firms in the country continue to enhance its growth economically. Technology being a critical component of any country’s economy remains highly crucial for the development of any country, including China. In China, the policymakers have in the recent years paid great attention to technological development in the country and the major aim is to make China a technologically sophisticated country. Being an important component of the economy, it is no doubt that FDI in China influences the country’s technology. China has experienced a remarkable increa se in its FDI, and this has continued to grow to start from the mid-1980s. The paper shows data on the yearly FDI inflows of China between the year 1985 and 2014 and this exhibits an increase in FDI inflows in China, even as this stood at $2 billion in the year 1985 and grew to reach $128 billion in the year 2014. In all the developing countries of the world, China ranks among the four largest receivers of FDI and in the year 2014 estimates by the United Nations indicated that China was the worlds largest destination for FDI inflows and Hong Kong and the United States followed behind. It is predicted that there will be persistent FDI inflows in China even in the future because currently, they are still modest. Foreign companies contribute immensely to the growth of the economy in China, even as these are the source of FDI in the country. These foreign-invested enterprises remain core to Chinas foreign trade even as they continue to contribute to the growth of foreign trade in China. In the year 2014, foreign companies accounted for 46.3 percent and 45.9 percent of Chinas imports and exports respectively, even though the peak was experienced in the year 2006 when the percentage of imports and exports accounted for by the foreign companies were 59.7 and 58.2 respectively.