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The Potential Impact of China–US BIT on China’s Manufacturing Sectors

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Outward Foreign Direct Investment of Chinese Enterprises

Part of the book series: Contributions to Economics ((CE))

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Abstract

This chapter finds that the overall effect of the foreign direct investment (FDI) and there by the China–US bilateral investment treaties (BIT) on Chinese manufacturing sector is positive, which raises the productivity and profitability of the firms, using various econometricmodels and other evidence. The manufacturing sector as a whole has already opened up to the world economy and needs to continue this process. The industries in the manufacturing sector do not need to be protected, except for in limited fields related to national security, scarce natural resources and well-defined strategic sectors. Gradual lifting of the protection maybe needed in the short-run for a small number of vulnerable sectors. A moderate relaxing of the current restrictions will increase FDI in manufacturing from all countries by 4–8% under different assumptions. This effect will be small when only considering FDI from the USA. Domestic firms need to update their technology, reduce costs and learn management skills from their foreign competitors, while using the national treatment terms in BIT to enter the fields that are not open to domestic firms under current regulations. Domestic firms also need to set up firm-level global strategies and reallocate firms’ resources according to the changing investment environment, taking advantage of profit opportunities outside the domestic markets.

This chapter is published in China Economic Journal by Yu Miaojie and Fan Zhang.

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Author information

Authors and Affiliations

  1. School of Economics, Peking University, Beijing, China

    Wei Tian

  2. Liaoning University, Shenyang, China

    Miaojie Yu

Authors
  1. Wei Tian
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  2. Miaojie Yu
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Correspondence to Wei Tian .

Appendix

Appendix

See Table 7.7.

Table 7.7 Current list of restricted and prohibited industries, manufacturing, 2011
Full size table

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Tian, W., Yu, M. (2022). The Potential Impact of China–US BIT on China’s Manufacturing Sectors. In: Outward Foreign Direct Investment of Chinese Enterprises. Contributions to Economics. Springer, Singapore. https://doi.org/10.1007/978-981-19-4719-3_7

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  • DOI: https://doi.org/10.1007/978-981-19-4719-3_7

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  • Publisher Name: Springer, Singapore

  • Print ISBN: 978-981-19-4718-6

  • Online ISBN: 978-981-19-4719-3

  • eBook Packages: Economics and FinanceEconomics and Finance (R0)

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