The Impact Of FDI On China Auto Industry And Its Intra-industry Trade

In the first years of 21st century, the role that FDI played in China automobile industry is revealed more and more important. The rapid development of China's automobile industry is mainly reflected by the rapid increasing export of automobile and the growing popularization of family cars. It can be said that the automobile industry is growing up as one of the pillars of China economy.In the early years of the reform-and-opening-up before China's accession to WTO, as China's economy becomes stronger, the leading automobile manufacturing companies in the world, such as Toyota, Ford, Honda, GM, Volkswagen, made their investments one after another in China for the sake of their own business strategy considerations. After China's accession to WTO, the impact of TNC investment to the automobile industry of China is increasingly significant. It is of great realistic significance how China to make better use of FDI to promote its position of auto industry in global specialization and to enhance its international competitiveness of auto industry in the world.This paper analyzes the role of FDI in the development of China's auto industry in two parts. The first part analyzes, with the consideration of the inflow of FDI, the development of the domestic automobile industry of China in aspects of the vehicle production growth, the variation of product structure, and the changing demand for automobiles. The second part analyzes, with the consideration of FDI, the intra-industry trade of China's auto industry and its status and changing tendency in global specialization.The article is divided into the following aspects:Chapters I and II raise the question that what is the relationship between rapid development of China's automobile industry and FDI, and also make clear the purpose and significance of this research, summarize the results of relative research on this topic at home and abroad, and make well comprehension of relative theories.Chapter III introduces the history of China's utilization of foreign capital, and describes the profile of utilizing foreign capital by structures, and by making horizontal and vertical comparison of the inflow of foreign capital into China's auto industry, it is shown that the total inflow of foreign capital into China's auto industry is growing constantly, and the structure of that is optimizing.Chapter IV analyzes the relations of FDI and the development of China's automobile industry on the background of China's auto trade pattern. It is found, by the analysis of the trade pattern and the motives of FDI in our auto industry, that the foreign investment in auto industry of China experienced the conversion from the cost-oriented pattern to the market-oriented pattern, which played a very big role in accelerating the export of China's auto industry. Chapter V points out the relationship between FDI and China's auto trade patterns, and as well the changes in its competitiveness, analyzing the intra-industry trade of horizontal and vertical patterns in China's auto industry. The conclusion of this chapter is: FDI in China have been promoting the export of cars manly by the private enterprises, and optimizing simultaneously the trade structure of auto parts industry. However, there is still a certain gap in the area of luxury cars compared with the developed countries.