37-38-39 Foreign Invest 中国经济发展与转型(英文版) 教学课件
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But FDI was never a significant factor in Chinese GDP. In its greatest year, 1994, FDI reached 6% of total Chinese GDP. FDI as a share of GDP has been greater in China than in Japan, Korea, or Taiwan, but still not a large share of total investment. But in some provinces of China- Fujian, Zhejiang, Shangdong, Jiangsu, Guangdong, and Shanghai and Bejing, the ratio of FDI/GDP has been very high- in 1993 to 2003, these share were in the range of 7% to 13% of provincial GDP.
Lack of regulation extends often to abuse of labor, and non-existent environmental standards. A good example are the maquiladora factories on the Mexican border with the US.
Chinese Modern Economic History
The assumption is that what matters most is the cost of final product delivered to the consumer. So I am perfectly happy to pay $2.00 or $3.00 for my T-shirt, for which the cotton was probably grown in the US, baled and sent to China, put into the shirt, the shirts put on a boat, taken off the boat and put on a train, taken off the train and put on a truck, taken off the truck and put in a store, in Chicago. For $2.00. Maybe $3.00.
Chinese Modern Economic History
The SEZ -
Special economic zones are not a Chinese invention. They were used extensively by the other Asian nations in their own development plans, and elsewhere in the world. The basic idea is to permit foreign investors (FDI) to come into the country on special terms, that are not available to local companies. The zones are also economically “walled off” from the rest of the local economy, so financial practices, labor costs, and social customs do not “damage” the rest of the country. In a sense, a SEZ grants certain special privileges to some companies and not others. This is another “dual track” system.
The maquiladora areas were set up in a cooperative agreement between the US and Mexican governments.
There is a sense in which SEZ are part of the “race to the bottom” in global manufacturing - which country can offer the greatest profit to companies, by offering the least safety, least protection of the environment, least compensation to workers.
Chinese Modern Economic History
One of the misconceptions among foreigners is that FDI is primarily responsible for the Chinese economic miracle.
There is no doubt that FDI brought an opening to the economy that would not have happened without it - a German company that builds a factory in Jiaxing wants to use a German architect to design the building,and German engineers to design the factory and supervise the work. These professionals need to be licensed to practice in China, or have a Chinese partner, and they also introduce German design principles to Chinese companies. So there is great sharing of knowledge and information. The SEZ were very important to reform.
Chinese Modern Economic History
Foreign Investment Naughton, Chapter 17
Chinese Modern Economic History
What is foreign direct investment (FDI)?
Money invested outside the nation. It can take several forms- cash, loans, guaranties, partnerships, wholly owned companies in the foreign nation. It is generally distinguished from contracting, in which one company buys and another sells in a trade relationship, distinct from an investment relationship (expectation of joint gains and sharing of future returns).
Chinese Modern Economic History
The SEZ allow a company in the zone to import raw materials without paying tariffs or experiencing other restrictions, and export finished goods without tariffs. The zone operates as if it were outside the country. Local labor and some local products are used in the zone, but labor laws may be different, including wage rates, and taxes on corporate profits may be different than on local businesses.
Chinese Modern Economic History
It is important to understand that there is no necessary relationship between global capitalism and democracy, or between global capitalism and poverty alleviation.
Chinese Modern Economic History
Many US manufacturing companies have established factories just across the border in Mexico. These factories use Mexican labor, which is much less expensive than US labor, without the same social costs of pensions, and health care, and unemployment insurance. Working conditions are not as good as in US factories, with regard to environmental protections, disposal of waste, and safety.
Consumers do not see the conditions under which products are manufactured, and this is a source of great concern to many in the world today. There are WTO standards for safety and environmental protection, but nations do not file complaints with each other over those elements, for the most part.
The same principle applies to the “duty free” shops in airports.
There is no doubt that SEZ can assist a national development strategy. One needs to consider, however, the costs of lack of regulation and flexibility on standards.
FDI can be in securities, loans or physical capital. It can be invested in any sector of the economy - resource extraction (mining or farming), manufacturing, services, or real estate.
Lack of regulation extends often to abuse of labor, and non-existent environmental standards. A good example are the maquiladora factories on the Mexican border with the US.
Chinese Modern Economic History
The assumption is that what matters most is the cost of final product delivered to the consumer. So I am perfectly happy to pay $2.00 or $3.00 for my T-shirt, for which the cotton was probably grown in the US, baled and sent to China, put into the shirt, the shirts put on a boat, taken off the boat and put on a train, taken off the train and put on a truck, taken off the truck and put in a store, in Chicago. For $2.00. Maybe $3.00.
Chinese Modern Economic History
The SEZ -
Special economic zones are not a Chinese invention. They were used extensively by the other Asian nations in their own development plans, and elsewhere in the world. The basic idea is to permit foreign investors (FDI) to come into the country on special terms, that are not available to local companies. The zones are also economically “walled off” from the rest of the local economy, so financial practices, labor costs, and social customs do not “damage” the rest of the country. In a sense, a SEZ grants certain special privileges to some companies and not others. This is another “dual track” system.
The maquiladora areas were set up in a cooperative agreement between the US and Mexican governments.
There is a sense in which SEZ are part of the “race to the bottom” in global manufacturing - which country can offer the greatest profit to companies, by offering the least safety, least protection of the environment, least compensation to workers.
Chinese Modern Economic History
One of the misconceptions among foreigners is that FDI is primarily responsible for the Chinese economic miracle.
There is no doubt that FDI brought an opening to the economy that would not have happened without it - a German company that builds a factory in Jiaxing wants to use a German architect to design the building,and German engineers to design the factory and supervise the work. These professionals need to be licensed to practice in China, or have a Chinese partner, and they also introduce German design principles to Chinese companies. So there is great sharing of knowledge and information. The SEZ were very important to reform.
Chinese Modern Economic History
Foreign Investment Naughton, Chapter 17
Chinese Modern Economic History
What is foreign direct investment (FDI)?
Money invested outside the nation. It can take several forms- cash, loans, guaranties, partnerships, wholly owned companies in the foreign nation. It is generally distinguished from contracting, in which one company buys and another sells in a trade relationship, distinct from an investment relationship (expectation of joint gains and sharing of future returns).
Chinese Modern Economic History
The SEZ allow a company in the zone to import raw materials without paying tariffs or experiencing other restrictions, and export finished goods without tariffs. The zone operates as if it were outside the country. Local labor and some local products are used in the zone, but labor laws may be different, including wage rates, and taxes on corporate profits may be different than on local businesses.
Chinese Modern Economic History
It is important to understand that there is no necessary relationship between global capitalism and democracy, or between global capitalism and poverty alleviation.
Chinese Modern Economic History
Many US manufacturing companies have established factories just across the border in Mexico. These factories use Mexican labor, which is much less expensive than US labor, without the same social costs of pensions, and health care, and unemployment insurance. Working conditions are not as good as in US factories, with regard to environmental protections, disposal of waste, and safety.
Consumers do not see the conditions under which products are manufactured, and this is a source of great concern to many in the world today. There are WTO standards for safety and environmental protection, but nations do not file complaints with each other over those elements, for the most part.
The same principle applies to the “duty free” shops in airports.
There is no doubt that SEZ can assist a national development strategy. One needs to consider, however, the costs of lack of regulation and flexibility on standards.
FDI can be in securities, loans or physical capital. It can be invested in any sector of the economy - resource extraction (mining or farming), manufacturing, services, or real estate.