China attracted a record $52.7bn (£32.9bn) in foreign direct investment (hereby referred to as ‘FDI’) in 2002. The Chinese government made it easier for foreign companies to expand in China and entry into the World Trade Organisation (WTO) in 2001 has resulted in liberalisation in some industries. A United Nations report has indicated China will become the top recipient of foreign director investment (FDI), overtaking the US. The state media reported that China expected to attract about $100bn in FDI a year between 2006 to 2010 (BBC, 2003a).

With inflation low, labour cheap and plentiful, urbanisation driving demand, and a savings rate of 30% providing easy capital, China is a manufacturer's dream. No wonder the Pearl River Delta in the south-east of the country, once a rural backwater dominated by rice paddies, has turned into the world's factory floor (BBC, 2004).

Chinese urban growth is unique, large and complex, and has provoked much scholarship. Before the period of economic reforms, China seemed to be in a stage of under-urbanization. By previous assessments, its urban development has been greatly influenced by national political ideologies and developmen

Zhou found that FDI into China brought the income level up considerable. Foreign-owned investments paid higher wages than state employers, in many cases due to some jobs requiring skilled labour. Alongside the menial, labour intensive work in China, skill-based technology was also incorporated (Zhou, 2001).

The pace of market-oriented reforms has quickened since the country entered the World Trade Organisation a year ago. To meet the need for new jobs, China's Communist authorities have embraced private enterprise permitting entrepreneurs to join the Communist Party.

However, that is not the only problem that affects the labour market in China. Consequently, riots broke out in one of the areas where FDI into China has been concentrated, creating the most employment.

Privately owned firms, which were illegal 25 years ago, now make up 30% of China's economy (Wong and Slater, 2002). As part of a new scheme, the city government provides tax breaks, financial rewards and loan guarantees to new, labour-intensive private businesses, as long as they hire laid-off workers. The scheme is the first of its kind in China and reflects a growing conviction among Chinese officials that the private sector - and in particular the service sector - has become the main engine of job creation. Even Shanghai’s job creation scheme is only targeted at those under 50 years old. In less wealthy parts of China, even this would be a luxury. Increased FDI has seen employment levels in the Guangdong province surge, due to the increased manufacturing output in the area. China's vast pool of cheap labour is a major reason for its success. At least 100 million migrant workers from poor rural districts are seeking work in the cities, according to Chinese government fi

Some topics in this essay:
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