| AS a developing country, in 2002, China made a big breakthrough and ranked the first in the world as far as the inward FDI concerned. It is not only a good verification of relative theory but also of political significance to research the influence of the inward FDI on Chinese economy. This paper aims at demonstrating the influence of FDI to china' s economic increase with the data ranging from 1982 to 2001. Firstly, we classify the influence of inward FDI into direct influence (capital accumulation), and indirect influence (technology spillover). Secondly, based on relative increasing theory, the paper establish a macroeconomic model, which embodies two influences in question respectively. Thirdly, this paper deals with and standardizes all data to eliminate dimension so that data have same caliber. Finally, after testing with the model we establish, we come to the following conclusion: (1) Dual-Gap Model is still fit for the situation of China presently. The., effect of capital accumulation of inward FDI is notable and plays a key role in our national development. (2) Although not as notable as that of capital accumulation, the effect of technology spillover positively influences economic increase. (3) Among all the middle variables that indirectly influence the technology spillover, human capital and infrastructure are key points. While the effect of R&D input by government and policy of inward FDI is less distinct. Moreover, compared with labor with higher education, the labor with secondary education is more likely to combine with FDI thus have a greater influence. (4) The inward FDI is not a complement for foreign trade, which is not in accordance with .the theory of Comparative Advantage after the Change of Production Function. Additionally, we are aware that this paper only gets the above conclusion through empirical study and still needs further explanation.
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