In recent years, China has been widely regarded as the most successful country in the world in utilizing inward foreign direct investment for its economic development. In particular, it has been portrayed and praised by the orthodox establishments of globalization as a 'model' in this regard for the rest of the developing world. The objective of this paper is to assess the role of FDI in China's economic development with reference to the broader literature on FDI and late development. Its main analytical finding is that FDI in China has promoted economic development in one respect (improving allocative efficiency), but has had unfavourable effect in another respect (worsening productive efficiency), resulting in an overall impact that tends to be on the negative side. The orthodox story of China is thus judged to be partial or even misleading.
 
November 30, 2006.