大学毕业设计---analysisonfdiinmiddleeastareaandchina.doc

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Shandong University
Master's thesis

Topic:
Analysis on FDI in Middle East Area and China

Name of writer: KHALID HALAWANI ALSAID
School: School of Economics
Specialty : International Trade
Mentor: Prof. Liu Qinling
Cooperating Mentor:

8May, 2012

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CONTENTS

Abstract 39
1 Introduction 41
1.1 Background and Significance 41
1.2 Related Definitions 43
1.3 Logic and Contents 44
1.3.1 Logic 44
1.3.2 Contents 44
1.4 Methodology 46
1.5 Novelties and Defects 46
1.5.1 Novelties 46
1.5.2 Defects 47
2 Literature Review 48
2.1 Relations between International Trade and FDI 48
2.2 Causes of FDI 50
2.3 the Host Country Effects of FDI 51
3 FDI in the Middle East from China 55
3.1 the Overall Status 55
3.1.1 Region Flow 55
3.1.2 Rising of Stock and Flow, Slightly Ups and Downs 57
3.2 Region Distribution 58
3.3 Industrial Distribution 62
3.3.1 Overall Industrial Distribution of Chinese FDI 62
3.3.2 Overall Industrial Distribution of FDI in the Middle East 65
3.4 Summary 71
4 FDI in China from the Middle East 73
4.1 Flow and Trend of Change 73
4.2 Region Distribution 74
4.3 Industrial Distribution 76
4.4 Summary 79
5 Conclusions and Suggestions 81
5.1 Conclusions 81
5.1.1 Smaller Amount,Lower Lever 81
5.1.2 Industrial Distribution is Uneven 83
5.1.3 Unbalanced Development of Direct Investment between China and the Middle East 83
5.2 Suggestions 84
5.2.1 Effectively Improve the Investment Environment, Attract more and more High Quality Foreign Capitals 84
5.2.2 Improve the Investment Nationality and Industrial Structure, Attract high-quality Investment 86
5.2.3 Strengthening Cooperation with developing countries, achieving win-win 87
References 89
Acknowledgements 93

ABSTRACT
In recent years, countries have adopted various preferential measures to attract foreign direct investment (FDI), in order to promote the rapid development of the local economy and improvement of productivity. The Middle East Area is no exception. The Middle East attracted foreign direct investment of 43.3 billion U.S dollars in 2006, compared with an increase of 25.5% over the same period last year. Because of the global financial crisis, FDI in the region got a heavy blow. For 11 consecutive years, the Chinese investment attraction was ranking first among the developing countries, and its competitiveness in international investments made the Middle East be threatened. In this context, FDI situation in the Middle East and relations between China and the Middle East are the focus of the governments and academics.
In this paper, we use the data (2003-2009) of the "World Investment Report" and the "Bulletin of China's foreign investment" on FDI in the region, from three aspects: the total flows of FDI from the region, regional and national flow and industrial distribution to have a comprehensive analysis of the Middle East. The results are as follows: FDI from China in this region are mainly located in Iran, Iraq, Saudi Arabia, UAE, and other seven countries. Judging from the industrial stock of FDI, by the end of 2009, FDI from China more than $100 million areas in the Middle East are Algeria, Saudi Arabia, Sudan, the United Arab Emirates, Egypt and Iran. The investment more than five hundred million dollars are Algeria, Saudi Arabia and Sudan, accumulative total stock for 20.26 billion, whose ratio is 64.3%; Judging from the investment industry, by the end of 2009, Chinese foreign direct investment in the Middle East mostly involves oil and mineral resources development, manufacture, project contracting, etc.
Through the research of Chinese FDI which came from the Middle East, the paper found: Saudi Arabia, the United Arab Emirates and Iran were the main regions which had direct investments in China. In addition, the Asian countries still were the main areas, of which Kuwait, Jordan, Israel had a large proportion. African country Egypt was the main outflow kingdom of Chinese FDI.
Finally, this thesis revealed the main conclusions, put forward some suggestions to improve the investment environments and policies, and then strengthen mutual cooperation.

Key Words：FDI, Region, Industry, Stock, Flow.

1 Introduction
1.1 Background and Significance
Middle East countries are under the rule of imperialist colonial for a long period. So the existing economic structures inevitably have a strong colonial characteristic, and with a strong dependency. Although this situation was improved later, but still has an impact. Now, except Israel and a few other countries in the Middle East, most countries’ industrial bases are weak, their industrial structures and product structures are similar, the complementariness is not strong. For example, in the 1980s, the inter-Arab investment was about $ 26 billions, while its foreign investment reached $ 760 billions, far more than the annual GDP of Arab countries.
However, in recent years, because of its richness in oil and gas and other natural resources and vast consumer markets in the Middle East region, it has becomed the main chasing market of the international trade and investment. The United States, Spain, Japan, Canada and other countries are the main sources of FDI in the region. As China, India and other developing countries’ faster economies development, these developing countries’ investments in the region were also increased gradually.
Arab Investment and Export Credit Guarantee Corporation recently release a report pointed that: the Direct Investment Growth rate of foreign companies in the Middle East and North Africa Areas will reach 15%. The report stressed that the expected growth rate of 15% mostly comes from the announced large-scale investment projects in the next few years, particularly the energy and infrastructure construction projects. Such as, many countries have announced resumption of the past interrupted or suspended oil and real estate projects. In addition, the spending of the Gulf Cooperation Council countries in infrastructures will reach $ 245 billions in the next 10 years (2011-2020); compared with the $ 170 billions in the previous 10 years (2000-2010), the increase rate will reach 44%.
On the other hand, global increasing demands for oil will increase the regional oil revenues, and thus will have a positive impact on attracing investment flows. From the foreign investments and the composition of Profits, we all see that in the field of natural energies, particularly in natural gas and mining industries, the relevant investment will continue increasing. Many multinational corporations, especially oil companies, are planning to increase the investment in the Middle East and North Africa regions.
The report also believes that another important factor for the foreign investments increasing in the Middle East and North Africa is that most of the countries in the region provide a good environment for foreign companies to investment. At present, there are 16 countries put forward 38 reform programs to optimize the investment environment.
A two-way investment between China and the Middle East was a little later. Although more than half of the Middle East countries have signed agreements with China to encourage and protect joint investments, provide a legal guarantee and give preferential terms for the investors from both sides, but the scale of two sides’ investments were still very small, mainly in fisheries, trade, construction, restaurant services and other fields. In the past two years, Chinese companies and enterprises in the Middle East countries have established many wholly-owned or joint-venture factories, mainly in the UAE, Saudi Arabia and other countries, many projects have achieved good economic sffects. The Middle East funds which China has used are mainly divided into two parts: government loans and direct investment. The Middle East countries whose investments in China developed much more rapidly are Saudi Arabia, Algeria, Sudan, United Arab Emirates, Iran, Israel and so on.
Overall, from both the actual abilities of this regional foreign investments and the total amount of foreign investments which China has attracted, Chinese utilize of Middle East countries finance is out of proportion, the development of bilateral FDI between China and the Middle East countries have a good prospect.
The paper will analyse deeply the industry distribution and structure of the regional FDI after 1999, especially before and after the financial crisis, and comparise the status quo of mutual investments between China and the Middle East, in order to achieve a more comprehensive understanding of the status quo and stating the reasons.
1.2 Related Definitions
The Middle East Area is a political and geographical concept, based on the most common academic division of the mainland, the region includes the West Asia and the North Africa which amount to 21 countries, Among these 13 countries are in the West Asia: Saudi Arabia, United Arab Emirates, Kuwait, Bahrain, Qatar, Oman, Jordan, Syria, Lebanon, Iraq, Palestine, Israel, Yemen; 6 countries are in the North Africa: Egypt, Sudan, Morocco, Algeria, Tunisia, Libya, in addition also involves Iran and Turkey.
The Foreign Direct Investment (FDI) are economic activities, the core of the activities is that the country's enterprises and groups invest in other countries (territories) in cash, in kind and intangible assets, and control business managements of the enterprises out of the foreign countries (territories). The content of foreign direct investment mainly reflecting by invests in another economy to achieve its goal of lasting interest.
1.3 Logics and Contents
1.3.1 Logics
Introduction
Related literature reviews
Analysis of Chinese FDI to the Middle East

Regional Distribution of FDI in the Middle East from China

Industrial Distribution of FDI in the Middle East from China

Analysis of the Middle East FDI in China

Flows and Change Trend of FDI in China from the Middle East
Regional Distribution of FDI in China from the Middle East
Conclusions and Suggestions

Conclusions
Suggestions
Improve the Investment Envi -ronment
Improve the Investment Nationality and Industrial Structure
Strengthening Cooperations
Overall Status of FDI in the Middle East from China
Industrial Distribution of FDI in China from the Middle East

1.3.2 Contents
The main Contents are as follows：
Chapter 1 is the introduction of this paper. It describes the background and significance of the paper, logics and the main contents, research methods and innovations and inadequacies.
Chapter 2 is literature review portion of this paper. This chapter begins by combing the relationship between FDI and international trade, then describes the FDI generated motivation and FDI effects on host country.
Chapter 3 analyzes the Chinese FDI in the Middle East, firstly, it analyzes the overall situation of Chinese FDI in the Middle East and found that since 2003, the fluctuation range of Chinese FDI flows is larger; Asia is the main region which the FDI flows to. Secondly, it makes a detailed analysis of regional distribution of Chinese FDI in the region, from the industry-wide FDI stock, Algeria, Saudi Arabia, Sudan, U.A.E., Egypt and Iran are the main countries which Chinese FDI flows to; From the investment flows, Algeria, Egypt, Iran, Saudi Arabia and U.A.E. remain the main countries which Chinese FDI flows to. Finally, through the analysis on the industrial distribution of Chinese FDI in the Middle East found that, Chinese FDI in this region is mainly concentrated in the oil and gas and mineral resource development, project contracting, labor service cooperation and other fields.
Chapter 4 analyses the FDI from the Middle East to China. Separately analysis from the total amount of FDI, regional and countrial flows and industrial distribution, found that, in recent years, the FDI from the Middle East to China has risen, mainly to natural resources industries. In contrast with it, although the average annual flow of the regional FDI in China is very high, but China is not the main country which its FDI has flowed to.
Chapter 5, based on the analysis of chapters 3 and 4, chapter 5 reveales the main findings of this article, and gives the targeted policy suggestions on the investment climate, investment structures and close cooperation in FDI between China and the Middle East.
1.4 Methodology
The research method of the article is comparative analysis. In other words, for FDI situation between China and the Middle East, this article uses 1999-2008’s data to make comparison by region, country and industry sector. Clearly find that the FDI of the Middle East mainly goes to which provinces and industries in China, and Chinese FDI to the region are mainly concentrated in the oil and gas and mineral resources developments, project contracts, labor service cooperations and other industries. This article uses 2003-2008’s data from the above two parts, takes comparative analysis on the FDI between the two regions, and found that the Middle East is becoming the major region which Chinese FDI flows to, and mainly to the natural resources sectors, while China is not the major region where the FDI of the Middle East flows to.
1.5 Novelties and Defects
1.5.1 Novelties
The innovative ideas are embodied in two aspects: the article makes more comprehensive and real time comparisons of FDI between China and the Middle East. On the one hand, from the overall, it goes through the FDI on the direction of both, then in-de