Foreign direct investment (FDI) is essential in international business and FDI in China has experienced rapid growth in the past three decades. The objective of this thesis is to analyze the political, economic, and cultural influences on FDI development at four stages of China's economy growth: the Isolation (1949-1978), Initial (1979-1989), Booming (1990-2001), and Maturing Stage (2002-present) stages. Political (key leadership, governing ideology, and legislation), economic (policy, general growth, FDI performance and consumer behaviors), and cultural issues (social ideology, corruption and bureaucracy, intellectual property rights and the impact of the Internet) were examined and their effects on FDI performance at various stages were analyzed. I proposed that FDI in China will continue to increase at a slower rate in general. However, FDI in the form of wholly foreign-owned enterprises, in the service sectors, and in the Western region will develop faster. Investment from large MNEs will increase, resulting in more technology- and capital-intensive large FDI projects. Overall, better investment environment including encouraging policies, enhanced political transparency, and increased market capacities in China will continue attract foreign investors. However, existing and emerging problems such as intellectual property, corruption, and nationalist consumerism will pose great challenges to investors.
