The income gap in China has been widening since the country started economic reform in 1978. It can be said that the increasing penetration of Foreign Direct Investment (FDI) into the Chinese economy and a widening income gap among residents are two remarkable phenomena that appeared almost at the same time after China began reform and openness. People are therefore prone to correlate the two phenomena and ask: Is there a certain correlation between FDI and the widening income gap in China? If there is, how does the strength of this correlation evolve? What strength has it reached so far? How did it come into being? These are the questions this study examines. This book gives an in-depth analysis into the impact of FDI in China and concentrates on how this has led to a significant increase in the widening of the income gap which has huge implications for China. It will appeal to anyone seeking to understand foreign investment in developing economies. Given the huge scope and variables in this study, the research was conducted by looking at dynamic panel analysis techniques with time-varying coefficients. (Series: Foreign Investment in China)