This research paper discusses and evaluates the impact on Mainland China's People's Democratic Republic (China) of multinational corporations (MNCs). From late 1978 to date, the Chinese economy has enjoyed fairly steady and very substantial growth both in its output (GDP), expanding foreign trade and rising average annual income per capita. A very close correlation and causal connection has existed between, on the one hand, economic reforms (gai ge) enacted by China during this period, including the liberalization of China's (open door or dui wai kai fang) concerning Foreign Direct Investment (FDI) and the entry of MNCs into China and, on the other hand, China's rate of economic progress.
In recent decades the political and economic goals of the Chinese government and the commercial objectives of many MNCs have dovetailed each other. Even though serious tensions and conflicts have emerged from time to time between the MNCs in China and their local counterparts, they have not overall significantly stymied or hindered their effective collaboration. They, however, remain latent and can adversely affect that relationship in the future should conditions drastically change.
After the communist takeover of China in 1949 and until late 1978 the Chinese government largely turned its back on the world economy. Pursuant to Mao Zhe Dong's Great Leap Forward of the 1950s, emphasis was placed on central planning, the promotion of defense, steel and other heavy industries, neglect of consumers and agriculture and the establishment of state-owned enterprises (SOEs) as the principal institutions operating in the economy. According to Lin (2000), the Chinese economy grew by 2.2 percent during the period 1952-1978; however, the private sector withered, tens of millions died from famine and malnutrition and China's products were boycotted by its largest potential foreign customer the United States. These conditions were exacerbated by the chaos ...