Empirical Analysis Of FDI's Effect On Export Of China

FDI (foreign direct investment) and export trade are two most important economical activities in developing host countries, and they are associated with each other closely .With the integration of the world economy and the increasing pace of liberalization, FDI will play a more important role in promoting the economic of China, and will occupy an important position in china's economic development. Meanwhile, China's exports are growing quickly. So it has theoretical and realistic meaning to study the influence deeply about FDI to our country's export. There are five parts to do the study.The first part of this paper is research of FDI's influence on host countries'international trade. First, there are three kinds of relationship between international direct investment and international trade in theory: alternative, complementary relationship, uncertain. But for only one country, it's hard to study the effect of international direct investment to international trade on theory. So the effect of FDI to China is to be more an empirical question. Second, the way of FDI influencing exports in China. FDI is mainly through technological spillovers, deepening the division of labor, improving the trade environment to promote the growth of exports in the host country. The second part elaborated the condition of FDI and exports in our country.FDI grows very quickly, and the investment field is bigger. Meanwhile, the quantity of our country's export continues to grow fast and the proportion of the Foreign-funded enterprise's exports increases unceasingly. The type of trading is changing from the general trade to processing trade, the trade structure promotes unceasingly, added value of goods enhances gradually. By making the relevant analysis between FDI and exports, the correlation coefficient reaches as high as 0.98.In the third part, we have used the panel data about FDI and export in 31 province to study, we have find that FDI have prompt the growth of export. For, analyzing the promotion clearly, I have to the research on eastern area, western area and middle area separately. The conclusion is different from the one before. The strongest promotion of FDI is in the east area, not in the western area. the strategy of developing western area is very useful. The space of absorbing FDI in our country is very big.The forth part is about the effect of FDI to our country's export competitive ability. First, I establish the regression models about the primary product and the industrial products. According to regression, we found that FDI promote the exports of primary products and manufactured goods. But the promotion to the competitive ability of the two kind's product is not clear. Then we do study on the effect of FDI to the type of trade. Through correlation analysis, the correlation coefficient between the export of foreign-funded enterprises in China and share of the processing trade is 0.9368. Through correlation analysis, the correlation coefficient between the export of foreign-funded enterprises in China and share of the general trade is -0.9439.In China's export trade and the rise in processing trade and the decline in general trade are caused by FDI.In the fifth part is a research on Long-term relationship between external trade of China and inward FDI based on Co integration. Results show that FDI and external trade are in a balanced relationship either in long-term or short-term. By Johansen test, we have known that When FDI has changed 1%, the export will change 0.446%.The influence of FDI to exports is more bigger the that of exports to FDI. By Granger test, we can find that FDI is the reason of the change of export, but it's not sure that export is the reason of the change of FDI.At last, we have made some policy recommendations based on the conclusion of the study: 1,the western development strategy should be used more further. The government should support the middle area absorb more FDI actively; 2,Not blind to attract foreign investment. The investment should be helpful to improve competitive ability of our enterprise; 3,Guide foreign capital to the first and the second industries; 4,Adjust the policies on processing trade, prompt the development of high-tech processing trade. Finally, speed up reform of the economic system, especially the foreign trade system; create a good and fair market environment for export trade.