Introduction: Foreign Investment in China under the Open Door Policy

Abstract

Since the implementation of the economic reform in late 1978, China has achieved impressive results, including rapid economic growth, major structural changes and unprecedented improvement in living standards for the majority of its 1.2 billion people.¹ In spite of challenging political, social and economic problems,² annual economic growth (GDP) during 1978–92 averaged 9 per cent, further increasing to 12 per cent during the eighth five year plan (1991–95), with industrial growth in the coastal region far exceeding these ‘modest’ figures.³ In 1993, the UBS International Finance predicted that the Chinese economy would have quadrupled that of 1980 by 1994 (which actually happened in 1995⁴), and it could double again by 2002.⁵ The calculations made by the World Bank and the International Monetary Fund (IMF) concluded that on a comparable basis, China had become the world’s second largest economy after the USA, with an estimated GDP of US$2850 billion in 1990 by ‘purchasing power parity’ (PPP), and over US$2000 billion by ‘new country weight’ in 1992.