china will see increases in foreign direct investment far sooner than much of the world according to World Bank’s forecasts. FDI is expected to reach $50.6 billion U.S. by the end of 2002, with increases of 11 percent in 2003 and 12 percent in 2004 expected. The $62.9 billion U.S. 2004 total can be attributed to several factors. One of which is China’s recent admission into the World Trade Organization. With this new advent, many chinese entrepreneurs are seeking investments outside the borders of the ancient country while many more foreign investors are seeing the potential that the world’s most populous country has to offer. China has also seen a staggeringly high GDP growth rate of 7.5 percent over the past year, which is projected to remain constant for the near future. The nation’s low wages and low labor costs also make FDI in the growing nation a worthy risk. The consumer base of China is also beginning to emerge, which is favorable to those corporations who are seeking a resource that has been virtually untapped by foreign investment for many years. However, when considering entering a developing country such as China; political, economic and financial risks must always be considered.  This paper studies the current economic and political environment of China, and examines the characteristics and barriers of FDI in China, the paper also assess China’s political and economic risks. 

China will see increases in foreign direct investment far sooner than much of the world according to World Bank’s forecasts. FDI is expected to reach $50.6 billion U.S. by the end of 2002, with increases of 11 percent in 2003 and 12 percent in 2004 expected. The $62.9 billion U.S. 2004 total can be attributed to several factors. One of which is China’s recent admission into the World Trade Organization. With this new advent, many Chinese entrepreneurs are seeking investments outside the borders of the ancient country while many more foreign investors are seeing the potential that the world’s most populous country has to offer. China has also seen a staggeringly high GDP growth rate of 7.5 percent over the past year, which is projected to remain constant for the near future. The nation’s low wages and low labor costs also make FDI in the growing nation a worthy risk. The consumer base of China is also beginning to emerge, which is favorable to those corporations who are seeking a resource that has been virtually untapped by foreign investment for many years. However, when considering entering a developing country such as China; political, economic and financial risks must always be considered.  This paper studies the current economic and political environment of China, and examines the characteristics and barriers of FDI in China, the paper also assess China’s political and economic risks.