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With an average annual growth rate of almost 10 percent since it adopted the “open door” policy, China has become a global economic powerhouse, and has attracted tremendous foreign direct investment, including investment from the United States. Why do U.S. multinational companies invest in China? Within China, what are the top investment destinations for American companies? Do U.S. affiliates operating in China behave differently from their counterparts from Taiwan, Japan, Hong Kong, and Europe?

In this book, K. C. Fung, Lawrence J. Lau, and Joseph S. Lee use data from both official and unpublished sources to answer these questions, and to shed light on the trends, characteristics, motives, and policy implications of U.S. direct investment in China. The authors show that U.S. multinational corporations operating in China are becoming increasingly profitable. American affiliates participate actively in the production of goods aimed at the rapidly growing domestic Chinese market. At the same time, significant amounts of Chinese exports shipped to the United States are produced by foreign-invested firms operating in China. This timely and important book contains a foreword by George P. Shultz, former U.S. secretary of state.

K. C. Fung is a professor of economics and cofounder of the Santa Cruz Center for International Economics at the University of California–Santa Cruz.

Lawrence J. Lau is the vice chancellor of the Chinese University of Hong Kong and the Kwoh-Ting Li Professor of Economic Development at Stanford University.

Joseph S. Lee is the dean of the School of Management at National Central University in Taiwan.