Study On The Influences Of The New Rules Of International Trade And Investment On China’s Outward Foreign Direct Investment

Since the 21 st century,with the rise of developing countries,especially emerging economies,their differences and conflicts with developed countries in global trade rule-making have become more and more obvious.The traditional WTO trade rules with tariffs and other border measures as the core are difficult to meet the requirements of high standards of trade and investment liberalization and have come to a standstill.In addition,the in-depth development of global value chains and "task trade" objectively requires the consistency of rules and standards among countries.As a result,developed countries such as the United States and Europe have adopted the TPP(Trans-Pacific Partnership Agreement),TTIP(Transatlantic Trade and Investment Agreement),TISA(International Trade in Services Agreement)and American BIT(Bilateral Investment Agreement)to implement and lead new rules,changing the international production and investment layout,and leading the global value chain.So far,the new rules of international trade and investment,represented by a series of post-border measures such as rule-consistent,competitive neutrality,state-owned enterprises,e-commerce,labor and environmental standards,have indeed had significant impacts on the international production and investment layout of the vast number of developing countries in the world,especially China.So,this paper studies the theoretical mechanism of the impact and examines its impact path and facts.Firstly,this paper combs the literature on the new rules of international trade and investment and their effects,compares the differences between the new rules and China’s FTAs investment rules,and analyzes their effects.Secondly,it introduces to simulate the effect of investment transfer and the dynamic adjustment of international production and investment distribution caused by the implementation of the new rules,and takes the location choice of China’s foreign direct investment as an example to test the theoretical derivation.Then,the paper examines the forward participation,backward participation and status of GVC position with the adjustment of the layout of international production and investment,and tests the impact of the new rules on the status of GVC position in different countries.Finally,the GTAP-Dyn model of international economics is used to quantitatively evaluate China’s response to the new rule investment transfer effect.The conclusions of the study are as follows:(1)The characteristics of the new rules and the differences between the new rules and China’s FTAs investment rules.The new rules have the following characteristics: first,they are promoted and led by developed countries such as the United States and Europe;second,regional or bilateral rules gradually replace global rules;third,there is a higher degree of trade and investment liberalization and facilitation;and fourth,post-border measures have become the focus of attention.Comparing the differences between the new rules and China’s FTAs investment rules,it is found that there is a big gap and deficiency between China’s FTAs investment rules and developed countries in terms of coverage,standards and new issues related to investment.(2)The new rules have become the mainstream of regional or inter-country trade and investment negotiations,and have had an important impact on the layout of international production and investment and the location choice of China’s outward foreign direct investment(OFDI).The new rules have changed market access,trade freedom and the level of investment protection among member countries,resulting in changes in the location choice of foreign direct investment(OFDI)by investors from all over the world(including China),resulting in the effect of investment transfer.Eventually,production and investment will gradually shift to developed countries such as the United States and Europe.(3)In the new rules of international trade and investment,the "trade freedom" represented by tariff and non-tariff barriers and the "investment protection" represented by post-border measures such as ISDS,environmental and labour norms and competition neutrality(state-owned enterprises)are areas that affect China’s outward foreign direct investment(OFDI).However,"market access",represented by pre-establishment national treatment,negative list and electronic commerce,does not directly affect the location choice of China’s foreign direct investment,but plays a joint role with "trade freedom" and "investment protection".(4)The developed countries intend to speed up the closure of the regional production chain and the value chain through the adjustment of the international production and investment layout caused by the new rules,so as to achieve the purpose of reconstructing the regional and even the global value chain.The empirical results also confirm this point,that is,the new rules do improve the implementing countries’ GVC position,and have negative impacts on non-implementing countries’ GVC positon,including China,and the impacts increase over time.The new rules have become an important weapon for developed countries such as the United States and Europe to dominate global value chains.(5)China’s response to the new rules investment transfer effect is to promote and even lead regional integration in accordance with nationally acceptable rules(including traditional trade rules and some new rules),including RCEP and the formation of FTAAP based on RCEP,and the “Belt and Road” construction.The simulation evaluation based on GTAP-Dyn shows that RCEP is the best choice for China to deal with the investment transfer effect of the new rules,and the FTAAP formed on the basis of RCEP can cope with the investment transfer effect of the new rules(although it is not the best choice),and can benefit more countries in Asia-Pacific region.The construction of "the Belt and Road" has a little effect on China’s response to the transfer of investment under the new rules.But it can ease the high concentration of international production and investment in the United States and Europe as a result of the new rules.There are three main innovations in this paper.First,this paper introduces the multinational FC model of new economic geography,explains and deduces the theoretical mechanism of the influence of the new rules of international trade and investment on the layout of international production and investment.By distinguishing the types of countries and setting the parameters of trade freedom,this paper simulates the dynamic changes of international production and investment location(share)after the signing of trade agreements between the United States and Europe and the implementation of the new rules.Second,according to the three channels(market access,trade freedom and investment protection)that affect the distribution of production and investment under the new rules,the new rules are subdivided into three indicators.Appropriate variables are selected to quantitatively evaluate the impact of the new rules on the distribution of production investment.Third,based on the value-added trade accounting method,the article introduces the value chain forward participation and backward participation indicators,theoretically analyzes and quantifies the changes in the the GVC position of the countries implementing the new rules and various countries including China,and tests the effect of implementing new rules in developed countries such as the United States and Europe that affect the layout of international production and thus lead the global value chain.