The distribution of Foreign Direct Investment in China is terribly unbalancing. The major reason for the distribution difference in China is due to the difference of investment environment.
Based on full and accurate statistics, this paper systematically analyzes the positive role and negative effect of the Foreign direct investment in China ever since reform and opening up on China′s national economic development, and proposes countermeasures for the prevention and reduction of the negative effect of the Foreign direct investment to better utilize Foreign direct investment.
Though the mount of foreign direct investment in China is noticeable and the rate of growth is striking, an important problem is that the distribution of realized FDI among China's regions is markedly asymmetrical and that foreign investors have favored the accessible eastern region, especially the traditional industrial centers among coastal cities and the Pearl Delta and Yangtze Delta.
Since China’s reform and opening to other countries, FDI has been exerting extensive influences on the international competitiveness of Chinese industries in the intensifying competition between foreign and domestic enterprises.
From 1992 the ratio of FDI scale to the really utilized foreign capital exceeded the ratio of foreign loan, FDI was maintaining his leading position, then in 1994 the ratio of FDI had reached 78.14% and kept stable nearly 80% from 1994.With the increasing of the scale of FDI in our country, the effect of FDI to our national economy is becoming stronger day by day and playing an important role.
Against the quickened world economic liberalization and global economic integration, foreign direct investment (FDI), especially the investment of multinational companies is playing an increasingly important role in China's economy, which has been an important part of our country's economy.
The situation and problems of venture investment in China are analyzed in this paper which pointed out some problems that hinder the process of venture investment, and also, gave some suggestions to promote the development of venture capital.