China realises it needs foreign companies

Investment from overseas is falling. That's a big problem

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 annualised rate of 10.8 per cent from 2000 to 2008. Enticed by China’s market size and development capacity, companies were willing to tolerate almost any kind of restriction. They turned over intellectual property; entered into joint ventures as junior partners, essentially training