Abstract
This chapter describes the industry structure in China and its influence on foreign direct investment. It highlights the key industries and emerging investment opportunities and discusses critical structural attributes of industry that have to be analyzed before making foreign direct investment decisions. The chapter presents some important recent findings and results concerning Chinese industry and deals with implications for international investors active in China. China's State Council has approved conditional investment in the civil aviation industry, on a trial basis, from foreign businesses. The electronics industry is among the fastest growing sectors in China. Inter-industry variance in profitability has been an enduring characteristic of the Chinese economy. Inter-industry variance in after-tax profitability abounds during transition, due primarily to long-rooted industry structure imperfections, the gradual approach of economic reforms, and a cumbersome consolidation tax system. Industry sales growth has been a key component of market attractiveness for both local firms and foreign invested enterprises.