The Research Of The Outward Foreign Direct Investment Policy On The Interaction Between RMB Internationalization And Outward Foreign Direct Investment

There is a close relationship between a country's outward foreign direct investment and the development of the country's currency internationalization.By Investigating the related process of the United Kingdom?the United States and Japan,we can get the following findings:the internationalization of the dollar?the yen,and the pound has experienced three stages:the industrial power,the development export country,and the investment power.The essence of currency internationalization is the internationalization of the country's economy;it needs strong economic and huge export-oriented economy and opened financial market and stable currency.As an important factor which affecting the country's export-oriented economy,outward foreign direct investment not only affected the degree of internationalization,but also restricted currency internationalization in turn.In short,outward foreign direct investment can promote the process of internationalization of currency;they are complementary to each other.In recent years,the Chinese government vigorously promotes the RMB internationalization,which had a positive effect to outward foreign direct investment.The RMB internationalization provides a convenient financing for the enterprise,reduces the purchase cost and currency risk,improves competitive advantage,and get a higher return on investment.As the development of the RMB internationalization,China's outward foreign direct investment has a stronger development trend,it can follow "the Belt and Road" to strengthen the investment in emerging markets,adjust the industrial structure to increase investment,use the overseas expansion of financial institutions to expand investment,eventually promotes the go global strategy of Chinese enterprises.On the other hand,the outward foreign direct investment promoted the progress of RMB internationalization actively.Through the analysis of direct impact angle,we can find that the outward foreign direct investment strengthen the RMB valuation,settlement and reserve function,promote and accelerate the process of the RMB internationalization.First of all,outward foreign direct investment can promote the frequent exchange currency multiplier effect.Along with the business activities,profit distribution and profit return,in the process of outward foreign direct investment in the investment and management,outward foreign direct investment continue strengthen the RMB denominated,investment and the value reserve function,improved its position in the international monetary system.Secondly,the outward foreign direct investment can increase the strength of RMB settlement,trigger agglomeration effect.Outward foreign direct investment promotes the RMB as the settlement currency in foreign exchange accumulation,formed a certain scale of settlement.With the expansion of China's outward foreign direct investment,due to the increase in debt denominated in RMB,the international demand for RMB will become larger and larger,It will makes the convergence and integration of international gradually formed in RMB as the settlement currency in foreign exchange trading,clearing the strength increase of RMB.Finally,the outward foreign direct investment can improve the competitive advantage;trigger the effect of currency substitution.International outward foreign direct investment currency substitution effect is use supply effect of investment as the foundation,when the enterprise carry on the outward foreign direct investment to the host country,the size of host country imports of some products will reduce,instead of the host country to pay for other international currencies.As a result,outward foreign direct investment is the objective to reduce and replace the invested country need to pay other international monetary demand,reducing its dependence on other international currencies,weakening the other international currency function at the same time,then it relative increase the international role of the RMB.As China's outward foreign direct investment continues expand,the RMB currency substitution effect will more and more obvious,the process of RMB.internationalization will more rapid and thorough.Through the analysis of indirect impact Angle,Choice of foreign trade as the medium,we can find the promoting mechanism between the outward foreign direct and RMB internationalization.On the one hand,the development of outward foreign direct investment can promote foreign trade.Because of the diversity of motivation,outward foreign direct investment will cause the trade scale changes,which may stimulate the corresponding complementary,and substitution effect may also occur.Moreover,due to the impact of capital factors,technical factors,industry structure and scale effect,outward foreign direct investment can promote the trade structure upgrading,create new business opportunities,and promote the development of foreign trade.On the other hand,the foreign trade can promote the process of RMB internationalization.Through the following three classical theory analysis:monetary search theory,the theory of optimum currency areas,and the currency choice theory.Develop foreign trade,improve the product diversity,maintain domestic economic stability in the expansion of the market share of trade at the same time,and keep the exchange rate stable,can promote the internationalization of the currency.In theoretical analysis phase,the author choose the dollar,pound,yen in foreign exchange trading,international bond markets,proportion in central banks as the explained variable,selects the American,British and Japanese GDP proportion of the world,outward foreign direct investment,foreign trade proportion,the actual inflation rate,effective exchange rate as explanatory variables,using panel data model to analyze the data from 1999 to 2013,and through the analysis of correlation and stability test draw the following conclusions:outward foreign direct investment can significantly affect the currency internationalization,the outward foreign direct investment grew by 1%,the currency proportion in the foreign exchange reserves will increase 2.36%,the currency proportion in the foreign exchange will increase 2.84%,the transaction currency proportion in international bonds accounted will improve 1.18%.Through the above analysis,we can draw the conclusion that the outward foreign direct investment and the internationalization of the RMB are mutual influenced.As an investment tool,the internationalization of the RMB provides the convenience for t the outward foreign direct investment,which plays a positive role in supporting.As a key factor,the outward foreign direct investment has actively promoted the development of the internationalization of the RMB,played a direct role in promoting.Therefore,in the process of internationalization of the RMB,the development of the outward foreign direct investment is pivotal,it cannot be ignored.In reality,the policy promotes development of foreign direct investment.Tracing back to the development of outward foreign direct investment policy,we can find that the outward foreign direct investment policy has always been accompanied by positive incentives.The development of policy has experienced two stages:adaptive adjustment stage and pioneering innovation stage.In the adjustment stage,outward foreign direct investment policy has experienced three periods of the exploration,the rise and the development.Outward foreign direct investment policy gradually refined,the government has delegated approval authority for foreign investment,and further simplify the approval procedures and the foreign exchange management system,introduced a series of policies to encourage,issued a series of encouraging policy.The macro management system of foreign project contracting and labor service cooperation has been gradually improved,and there are laws to abide by.In the innovation stage,with the development of the internationalization of the RMB,China's government has introduced the RMB outward foreign direct investment policy,and the people's Bank is responsible for the specific policy formulation and deployment of the implementation,it provide a strong policy support for the enterprise investment,financing and capital operation.This is a great innovation in the history of outward foreign direct investment policy.The outward foreign direct investment policy had a certain improvement than the past,it abandons the past dross,further streamline administration,delegate real powers to enterprise,accelerate the development of outward foreign direct investment.Therefore,if we need to vigorously promote the internationalization of the RMB,we cannot relax in accelerating the development of foreign direct investment,which is promoted by the policy.In other words,the improvement of foreign direct investment policy is the urgent work,which can promote the development of foreign direct investment,and can also add power to the progress of the RMB internationalization.As everyone knows,The United Kingdom,the United States and Japan are very successful in foreign direct investment,which is closely related to their policy.Summary and analysis of the successful experience of these countries,we can find that the strategy of outward foreign direct investment is the premise condition,special management and service institutions is infrastructure,legal system is a powerful guarantee,perfect taxation financial system is strong support,policy of RMB outward foreign direct investment is to build effective supplement.Therefore,we can give the following suggestions.Firstly,we should formulate the national strategy of outward foreign direct investment,try to design<the national outline for the development of outward foreign direct investment>,to grasp the opportunity of "the Belt and Road";Secondly,we should build specialized management and services institutions,establish a special management committee?special insurance institution and the fund,simplify procedure and improve the efficiency;Thirdly,we should improve the legal protection system,try to formulate<the law of outward foreign direct investment>in the domestic level,play the role of bilateral agreements in the international level,participate in the formulation of international rules actively,optimize the overseas investment insurance system and the right of subrogation;Fourthly,we should innovate and improve the fiscal monetary policy,establish the financial support policy system,provide preferential tax policy,broaden the financing channels by policy banks;Fifthly,we should promote Cross-border RMB settlement sequentially,ameliorate the current policy barriers,carry out the policy innovation in line with local conditions,optimize the policy of outward foreign direct investment further,promote the rapid development of outward foreign direct investment and the RMB internationalization.At present,there are many studies about the RMB internationalization,research on outward foreign direct investment is relatively mature,but the research on the impact of them is very limited,especially the policy research of outward foreign direct investment which can promote them collectively.In this case,the research on outward foreign direct investment policy has very important theoretical and practical value.Therefore,this article will study consummate ways of the policy,which is from the perspective of China's foreign direct investment and the internationalization of the RMB,Strive to promote policies,foreign direct investment and the RMB internationalization to form a virtuous circle,optimize the policy of outward foreign direct investment further,and promote the rapid development of outward foreign direct investment and the RMB internationalization.