Discuss the possible measures that, you think, Chinese government should take to further attract inward FAD and optimize Its structure to meet China’s goals of economic development? Attraction of Inward foreign direct Investments (FAD) has been deserving attention for many governments worldwide. Conditions of Infrastructure, corruption, taxes, as well as the Implementation of the policies by the governments are common factors of the attraction of Inward FAD.
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In order to further attract Inward FAD and optimize Its structure to meet China’s goals of economic development, I think there are three aspects the government could consider, which are government polices, Incentives, and promotions.. Firstly, implementations of government policies. Policies that are favorable to domestic investment very often attract inward FAD. Take technological FAD as an example. Policies which can improve country’s research infrastructures are an important considerable factor for investors.
Government could build more this kind of facilities including public research centers, scientific platforms in key technological areas, or even technological parks. These are attractive for foreign multinationals, cause they will facilitate networking with others, and these can provide administrative support, as well as providing a pleasant working environment for them. Besides, the government could also offer research hosting services to them. This kind of services could increase the speed of implementation of FAD, and reduce costs and bureaucracy, which are important issues in FAD consideration.
Apart from this, the government could develop a transparent and enforceable intellectual property as this may be of interest to FAD. In order to facilitate collaboration in research, government should develop a clear rule over ownership and exploitation of he resulting IP. Secondly, offering deferent types of Incentives. There are two major categories of Incentives that the government could consider: (1) subsidies and tax packages, (2) Information advantages and agglomeration support.
For the first type, It Is very common in political economies that are characterized by high level of political Involvement and high average tax burden. Direct Investment Is an option. As a result, the corporation can get free access to Infrastructure. Chinese government could use In marketing campaign In a transparent way to attract Inward FAD. Take grants and tax concessions as an example. The tax-code provision could benefit some economic satellites, which could encourage operational efficiencies.
It could also ensure the government policies are responsive to citizens’ preference, which provides the most efficient means to the end of harmonistic of tax rates and provision. For the competition for inward FAD. For example, the difficulty of the Chinese language may be a barrier to the inward FAD invest in China, even the country is integrated in all aspects. The Chinese government could provide support to those foreign investors by helping them to realize the necessity of being present in China. This could be done by implementing rules, for instance, all consumer information should be written in Chinese.
As a result, the government could turn this disadvantage into a factor for attracting inward FAD. Thirdly, organizing inward investment promotion. It is aimed at increasing the international visibility of China through marketing and at advancing the process of investment by giving tailored services. These could be done through inward investment agencies. This kind of agencies could ensure that existing and new inward FAD products or services are being announced and advertised through efferent ways such as advertisements in TV and magazines, and online promotions.
This could become incentives for investment of inward FAD. Besides, it could provide the inward FAD a clear and up-to-date document indicating the strengths of China as a perfect location for them. To conclude, this kind of agencies aimed at providing some kind of “one-stop shop” for investors, offering latest business information, as well as assistance. To conclude, the Chinese government could successfully attract more inward FAD by taking the above three measures, in order to fulfill the economic goals.