The Effect Of Foreign Direct Investment (FDI) On China's Foreign Export Trade

Foreign Export trade is one of the important driving powers to a country, so it is necessary to study the factors that can affect it. On the other hand, foreign direct investment (FDI) has been keeping developed since the reformation of China and made an indispensable part in our economic system nowadays. So, it is reasonable to ask if the two has a certain relationship? And what is it? The questions above are the main problems the author tries to solve. To start the analysis, the paper uses the time series data of FDI and export in china from 1979 to 2003 to make a description of the two. From the description, a basic conclusion was made that there is really a certain relationship between FDI and china's exportation. Then, the paper gives a detailed analysis of how FDI affects the China's exportation amount and exportation structure. This paper uses both theorical and metrical methods to research the relationship between FDI and china's exportation amount. In theory, the paper mainly introduced the Mundell model, K.Kojimz model, and some modern results. In metric, the paper uses the full set of time series analysis method first advanced by Engle and Grange. According to that method, the paper makes correlation test, regression analysis and Granger test of causality to the relationship between FDI and China's exportation amount, and forms the regression model and error correct model (ECM) of them. The study shows that FDI can really promote China's exportation amount but that promotion is somehow limited. Foreign export structure has two means: export commodity structure and export destination structure. This paper uses both theorical and quantitative methods to analyze the relationship between FDI and China's export commodity structure, the results are that FDI can improve China's export commodity structure, but the promotion is more obvious in labor-dense product than technology-dense products. And the paper uses both theorical and qualitative methods to analyze the relationship between FDI and China's export destination structure, the results are that FDI can improve China's exportation destination structure to a certain degree, but there isn't a strict function relationship between them. At last, the paper also introduces some defects in China's absorption of FDI and presents some ways to improve them.