The Characteristics of Adaptation of FDI in China & Reorientation of FDI as a Provision for the Modernization

The impressive volumes of FDI inflows made a significant contribution to the Chinese economy in terms of capital formation and the country's special economic appearance and had a direct impact on its economic growth and structural changes. This article is devoted to the study of the evolution of FDI as a significant tool for the development of the Chinese economic model. The main goal of the study is to identify the features of adaptation of foreign capital as an instrument of additional financing for certain industries and its role in reforming the economic model of China. The research methodology is based on the principles of Product-cycle theory and as well as interdisciplinary system approach and historical analysis method. The article demonstrates that, firstly, the regional distribution of FDI inflows to China was very uneven and mainly concentrated in the eastern region of special economic zones, which resulted in regional inequality between the provinces in terms of economic development, which the provinces have not overcome to this day. Secondly, among economic sectors, industry and the real estate sector are the main recipients of FDI. Third, it demonstrates the peculiarity of adapting FDI mechanisms for the formation and upgrade of economic relations with partner countries. Fourth, it discusses updating FDI policy and regulatory changes in relation and the specifics of law enforcement, considering the specifics of the local governance model. © 2021, Springer Nature Switzerland AG.