| Summary: | 碩士 === 國立中興大學 === 國際政治研究所 === 91 === Generally speaking, foreign direct investment is vital for a country’s economic growth. Unfortunately, developing countries lack enough foreign exchange reserves and capital needed for economic development. To solve these problems, it may be a good way to introduce foreign direct investment adequately.
In a totalitarian system in which only one political group leads the country and determines all policies, the local government unevenly depends on the financial support from the Central. Under such a typical structure of centrally planned economy, both incentives and motivation stimulating the local government to develop economy are dispensable. Since 1980s CCP was forced to adopt “release of power and benefits” policy, authorizing local government and enterprises the right of “farmed finance” and economic control. The system was converting to a market-oriented economy step by step through implementation of decentralization. After years of reformation, nevertheless, mainland CCP’s authority has institutionally transferred and then its legitimacy has turned out to be based on the economic development rather than ideology. With the proud performance, the local government is able to determine the financial policies of its own, making itself the controller and manager to the local economy. Benefits have become the core concern, and sometimes the local government even acts against the original position defined by the Central. If the totalitarian system never changes, how dose the local government bargain? Besides, what impact will be brought on central-local relationship in the future? These two issues will be discussed in this paper.
Statistics of all categories and assertions made by all schools are analyzed in this paper in order to explore the element that has upgraded the local capability. Accordingly, there is seemingly a correlation between the capability and economic development. But how does the local economy elaborates so highly after failure of the Cultural Revolution and the negative impact of “dual-gap”?
On one hand, to help the local economy, enormous number of capital inflows as well as the expanding effects of foreign production and management techniques, are becoming far more important than any specific policy or geographical element.
On the other hand, foreign direct investment may choose to create alliance with the local government in that they expect not only to gain access to local market but also affect China’s political and economic institution negative for business. Foreign direct investment even seeks further reformation of China through international pressures.
Either the bottom-to-top pressures started by foreign direct investment or top-to-bottom forces caused by the international society asking for a better norm and openness of market, therefore, may bring institutional risks to China’s reform in both central and local government.
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