, Columnist
China Realizes It Needs Foreign Companies
Investment from overseas is falling. That's a big problem.
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China is increasingly desperate for foreign investment. Yet foreign companies are less and less interested in what it has to offer. How this problem gets resolved may be one of the most important questions facing China's economy.
After China joined the World Trade Organization, in 2001, overseas investors couldn't wait to jump in. Foreign direct investment grew at an annualized rate of 10.8 percent from 2000 to 2008. Enticed by China's market size and development capacity, companies were willing tolerate almost any kind of restriction. They turned over intellectual property; entered into joint ventures as junior partners, essentially training their eventual competitors; and accepted restricted access to wide swathes of the economy.