This paper examines how the FDI locational choice is influenced by regional characteristics in mainland China, such as market, labor cost, allocative efficiency, transportation, and research and development capability. Empirical testing is conducted by the conditional logit model using pooled cross -section and time-series data. Empirical findings for the 1987-1991 period indicate that the market only affects FDI in the middle region. Surprisingly, wages do not affect FDI, but FDI may not necessarily locate near innovative Chinese industries.
