It has been 28years since China first carried out reforms. For the last 28years, we have many break-through in FDI utilization. As for FDI, we start from a small scale to big one, and have formed a pattern of all-orientation, multi-arrangement, wide-field. Nowadays, FDI has brought important and far-reaching influence on China’s economic development. On the whole, the effect of FDI on China’s economy mainly are economic growth, technological improvement, foreign trade and employment. Whereas, it will be kind of risk when the ratio of FDI in China has surpassed a certain degree of limit. Therefore, it is necessary to analyze the FDI effect systematically, to study thoroughly the influence caused by FDI. We have to fully make use of the positive effect of FDI, and also have to be aware of the negative effect of FDI, and to take efficient measures to reduce negative effect so as to make use of FDI more efficiently. This study consists of 5 chapters. Chapter 1 described the background, purpose, research methodology and the scope of this study. Chapter 2 demonstrated four phases of the chinese FDI, including the elementary phase (1979-1982), the growing phase (1983-1991), the regulating phase (1992-2000), the redeveloping phase (2001-now) in the chinese FDI policy, We analyze the properties of FDI inflows to China from the standpoints of annual performances, investing countries, regions and industries. Chapter 3 showed the five phases of the foreign investment commendation from the Chinese open-door policy since the year 1977. including the elementary phase (1978-1984), the developing phase (1985-1991), the growing phase (1992-1994), the regulating phase (1995-1999), and redeveloping phase (2000-now). Then I analyzed the historical trends of market opening, FDI inflow, sponsoring and promotion, and regulating policy measures. In the previous chapter we analyzed determinants of FDI and the FDI inducement policy in China, and also analyze the main properties of the FDI inflows to China. In chapter 4 with the opening of the costal areas and giving the preferential policies to the foreign direct investment, many foreign corporations entered into china and invested largely, Thanks to them, china's foreign investment, technology, employment and export made a big step and china became a big economic country.` Finally, Chapter 5 summarized the previously discussed matters, and describes a prospect for Chinese foreign direct investment policy as well as the suggestions and limitations of this study and directions of future studies.