A Study On The Trade Effect Of China's OFDI To EU

Since the 1950s, studies on the relationship of the two have already become one of the themes of theoretical and empirical research, with a lot of scholars having done studies on the relationship at the theoretical and empirical levels from different perspectives. But because of the different samples and research methods in study, there is no consensus on the issue. European Union (EU), the largest developed economy in the world, and China, the largest developing economy in the world, the development of bilateral investment and trade plays an essential role both in themselves and in the peaceful coexistence of the world economy. At present, China is the largest source of imports and the second largest trading partner and export market of EU only next United States (US), and China is EU's largest trading partner and export market, the second largest source of imports and the fourth largest FDI destination. With the deepening of economic globalization, the trading relationship between China and EU has been increasingly consolidated. After 30 years of rapid development since the Reform and Opening-up, China has jumped to the world's second largest economic entity. Under the background of the world economy recession and the Euro Zone still in the debt-crisis, China and EU strive to upgrade the bilateral relations for both the common interest of two sides and profound impact on the future trend of the world economy. Therefore, from the perspective of the relationship between FDI and foreign trade, based on the identification with the current situation and characteristics of China's investment and trade to EU, analysis on the trade effect of China's FDI to EU from aspects of the foreign trade scale, national differences and trade structure respectively, problems existing in the process of China's FDI to EU can be spotted. After making detailed, some policy suggestions are proposed to help maintain and prompted sustainable good relationship development in Sino-EU's trade. The dissertation includes seven chapters as follows:Chapter One is an introduction, including the background and significance of the study, literatures reviews, the impacts on its comment and further explanation of the study.Chapter Two is the literature review of the study in effect of FDI on foreign trade. Some relevant traditional theories are reviewed, then make in-depth research on three relationship about FDI and foreign trade from substitute, complement and unsure, make theoretical foundation of the study.Chapter Three is on the history and developing status of China's FDI and foreign trade with EU, mainly describing the development process and developing status of China's direct investment and foreign trade with EU from three aspects of the trade scale, differences between countries and commodities structure in investment and trade.Chapter Four is on the impact of China's FDI to EU on trade scale, the empirical analysis is made from three aspects of total volume of bilateral trade^ export and import of China and EU, and then the comparative analysis on the different effects of different factors on export and import of China to EU. The results showed that, China's direct investment in the EU has generating a positive role in promoting the total volume of bilateral trade whether in the long term or in the shout term, and the effect of China's direct investment in the EU in the long term excesses that in the short term. Furthermore, the reverse effect on import excess the exports caused effects in the short term, but in the long term, this phenomenon reverse.Chapter Five is the empirical study of the trade structure effect from China's direct investment to EU. Trade structure measures a country's trade situation to other country within a certain period by interconnected and proportional relationship between the factors of production. By constructing trade gravity model, we classify the commodity in bilateral trade into two species of primary products and manufactured goods, then further broken down manufactured goods into capital-intensive products and labor-intensive products, measure the trade structure effect from China's direct investment to EU from two aspects of export and import. The results showed that, China's direct investment to EU have significant promoting effect on labor-intensive products both in export and import, and the effect for export excess that for import, furthermore, also have significant promoting effect on the export of capital-intensive products and on the import of resource-intensive products.Chapter Six is the study on the trade effect of China's direct investment to EU on the basis of Chapter Four, an analysis about the national differences in trade effect about China's direct investment to EU is presented. In this chapter, we firstly sort out the relevant literature about the national differences of trade effect, then interpret the mechanism of national differences produced in foreign direct investment of home nation, followed by is an empirical analysis about this problem through the establishing of trade gravity model and using panel data. The results shows that, China's direct investment to EU has significant export creation effect for major EU countries as a whole both in total trade volume?export and import. At the same time, these effects behave different size between different EU countries, the existing trade links between China and EU countries will also effect the trade effect to some extent.Chapter seven is the conclusions?policy recommendations and research prospects of the full text. We put forward policy recommendations for adjusting China's direct investment to EU and coordinating EU-China trade based on theoretical and empirical research findings summarized in the text above and give some further research in propose future.By discussing the impact of China's FDI to EU on bilateral trade, it can be obviously found that, China's FDI to EU have positive development trend with bilateral trade volume, which performed in three aspects of trade volume, differences between countries and commodities structure. We should enhance the soft power of China's foreign economy and culture, create a mutual promoted relationship between China's FDI and trade to EU to enhance the benefits of China's FDI by adjusting the strategy of China's FDI and trade to EU under the guidance of "go out" and "along the way" strategy, trying to make Sino-EU relationship to an advanced higher and deeper level.