Abstract: Massive influx of foreign direct investment (FDI) since her opening to the outside world has made China the largest FDI receiving nation in the developing world. The distribution of FDI in China is highly uneven because of complex regional differences. On the whole, FDI has been concentrated in the coastal provinces and along the Changjiang River, namely in the provinces of Guangdong, Jiangsu, Fujian, Shanghai, Shandong, Liaoning, Zhejiang and Hainan. From the 1980s to the 1990s, there was a major shift from the south to the north and the middle reaches of the Changjiang River. This regional pattern is explained by coefficients of elasticity. Using SAS, this paper calculates the relative importance of three sets of factors affecting the distribution of FDI. The traditional factors used include comparative labor cost, market capability and capital productivity. The aggregate factors include infrastructure, the level of economic development and cumulative FDI. And the risk factors include cumulative FDI, the degree of openness, and geo economic factors. The following conclusions were reached. (1) The regional patterns of FDI reflect the existing unbalanced patterns of development. (2) The key factors influencing the patterns of FDI are information cost, market capability and risk factors. (3) A change in the selected factors affected the comparative advantages of regions, which in turn affected the regional patterns of FDI. (4) FDI has moved beyond the early exploratory stage of seeking quick profit to the mature stage aimed at market expansion. (5) The basic patterns of FDI distribution are difficult to change because of the inherent differences among regions.

Key words: foreign direct investment, regional difference, China