International Trade And Foreign Direct Investment In The Policy Options

International trade and global direct investment are two most important economic activities , therefore, their mutual relationship should be discovered so as to produce a harmony of the policies on the two. As for it, it is necessary to look back on the development of theory of international trade and theory of global direct investment first and then make a critical analysis of the previous studies on the relationship make by scholars home and abroad, where question come up, namely, (1) No division of reasons for every country to carry out international trade (2) No placement of international trade under different policy frames (3) No division of import and export in international trade so as to discuss respectively the relationship between investment country and it's global direct investment and the relationship between host country's import and export and global direct investment (4) No division of different national directions in international trade and global direct investment . Such sweeping studies can only partly explain the actual relationship between international trade and global direct investment.Actually, there are different reasons for every country and every country during different periods to carry out international trade, which result in different relationship between international trade and global direct investment. Such relationship is also different under different policy frames in different country or a country during different periods. Different national direction affects the relationship too. This article divides the reasons into absolute cost advantage, comparative cost advantage and consuming preference, and divides policy frames into policy of protection and policy of free trade, and divides the relationship into four kinds as discussed in the first paragraph. On that basis, the relationship between international trade and global direct investment carried out for different reasons and in different national directions are discussed and policy of choice is put forward correspondingly.Finally, as a developing country, china has been experiencing a process of evolution and development in her foreign trade and global direct investment and their mutual relationship. According to an positivist analysis on the basis of nearly 20-year statistics, this article aims to show that direct investment by foreign trades has given a great impetus to china's import and export, but with 3-year delay, China's direct investment in foreign countries is positively related to her import and export , however, to a far lesser degree than foreign direct investment affects china's import and export. In a word, china's form now on , has to make adjustments timely to her policy in foreign trade and global direct investment after her entry into World Trade Organization.