China`s Regional Competition of Attracting FDI from Taiwan: Shanghai Economic Zone versus other Economic Zones

Abstract

The purpose of this paper is to analyze China`s regional competition of attracting FDI from Taiwan, particularly focusing on the Shanghai Economic Zone versus other zones. This study adopts China`s official data provided by various years of China Statistical Yearbook, China Foreign Economic Statistical Yearbook, and statistical yearbooks for each province and a survey conducted by Chiu-Chen and Kuo (2003) to analyze this issue. The primary finding of this study is that the coastal area is the primary destination of FDI in China, especially the provinces located in the Zhujiang River Delta, Changjiang River Delta, and Greater Bohai Sea Area. Since the Changjiang River Delta has a large market size and an inland traffic transportation system, investment from Taiwanese high-technology enterprises in this area has increased sharply recently. Finally, the Changjiang River Delta has a very low investment risk and the highest assessment of investment environment based upon the viewpoint of Taiwanese enterprises. Without a doubt, the Changjiang River Delta, especially Shanghai, has become the most popular region for attracting FDI in China.