Centralized Economies

Running head : Overview of Chinese and U .S economies

Overview of Chinese and U .S economies

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An overview of Chinese Economy

With a population of over 1 .2 billion , China has exploded into a huge potential marketplace for the world 's production of goods and services The international policy makers and business executives alike have realised a powerful long-term trend in Southeast Asia : the rise of the great China economy . Paced by a rapid rate of investment and given the abundance of trained human

capital , the Asian rim , of which China is a leading nation , has become the fastest growing region of the world . Many observers expect this trend to continue for at least the rest of the decade-and most likely into the next century (U .S . Commercial Service

China has been doing an admirable job of attracting foreign direct Investment (FDI , which has made it a powerful force to reckon with in the World Economic scene . In 2004 , China kept its place as one of the top two destinations in the world of FDI adding 64 billion . Over 564 billion of FDI has been invested in China since it opened to the world in 1979 .Executives overwhelmingly consider China to be the undisputed top FDI destination for the third year in a row in 2004 . About 40 of global investors expressed a more positive outlook on China 's economy four times the number of executives who had a dimmer view of China

FDI History in China

The path to economic liberalization has been a difficult but fruitful one for China . It has triumphed due to its determination and commitment to open up its markets to foreign investors . A Business Week article in 2001 stated that after two decades of steady but halting reforms Beijing is now racing to dismantle the last vestiges of a command economy . Let us trace the FDI history in China

Since late 1978 , China has carried out massive economic reforms in an effort to restructure its economy to be more market oriented . FDI was one of the primary goals of its reforms . The government has over the years slowly liberalized the restrictions on FDI to gain technology transfer , modern management skills and foreign exchange . The government 's first move to entice FDI was taken in 1979 with the Equity Joint Venture Law . This law allowed the legal entry of FDI and provided a statutory basis for the establishment of joint ventures in China . But Investment was allowed in only designated Special Economic Zones (SEZs and was encouraged via tax incentives . As investments grew , additional laws were required . In 1983 another law was issued which provided greater details on all joint ventures in FDI . The government also expanded the SEZs in 1984 .Then it passed Foreign Exchange Balance Provisions and Encouragement provisions in 1986 , which facilitated FDI and allowed firms to solve foreign exchange problems (Jun Fu , November 2000 . In 1994 , China conducted a new round of FDI reforms . It...