The role of foreign firms in China's urban transformation: A case study of Suzhou

To a large extent the Chinese government has relied upon foreign direct investment (FDI) to stimulate economic growth. Inward FDI, which has expanded massively in China after the opening up policy, is significant to Chinese cities at least in the following three aspects. First, inward FDI contributes to economic vitality as it involves production in cities. Second, the establishment of foreign firms has facilitated rural-to-urban migration, and thus stimulated urban growth. As inward FDI is mostly labour-intensive manufacturing, an influx of foreign capital has been accompanied by an increase in the number of rural migrants. Third, foreign firms have brought foreign nationals to Chinese cities, thus creating demand for multicultural services and adding to the vibrancy of the city. This chapter examines these three outcomes at China's national level using Suzhou as a case study.