Analyzing the Impact of Foreign Direct Investment on Economic Growth in China

Abstract

Foreign Direct Investment (FDI) has acted as a primary catalyst for China’s economic growth, transforming the nation from an isolated agrarian economy into a global manufacturing powerhouse. While historical data demonstrates that foreign direct investments fundamentally drove China's capital deepening, export expansion, and technology transfer, contemporary trends show a critical shift: China is transitioning from relying on high-volume manufacturing investments to targeting high-quality, innovation-driven FDI. The research paper investigates the multidimensional impact of Foreign Direct Investment (FDI) on China’s macro-economic trajectory through a comprehensive mixed-methods framework. The results demonstrate that China's domination on critical raw materials market, innovation and technology exerts a significant effect on economic growth. Due to the regional disparities in FDI distribution, the paper offers a significant contribution to the literature, formulating strategic guidelines for policymakers to leverage foreign direct investment for a more balanced economic growth in China.