Research On The Effect On China's Economy Of Global FDI's Shift Towards Service

As reported in the World Investment Report 2004, the composition of global FDI has shifted towards services in all regions. This paper examines the economic effects in China caused by the trend. At first it analyze the theoretical basis of this trend by the theory of industry development, the theory of international trade and the theory of international investment and its characteristics and practical basis. After analyzing the current situation and tendency of inflow service FDI into China, this paper focuses on two issues. One is the economic effect on China's inflow of FDI in Service sector. The other is how can China make most of the inflow FDI in service especially under the condition that increasing FDI shifts towards service. At last this paper comes to the conclusion that China will benefit from the inflow FDI in service in several fields, such as accelerating technology transfer, strengthening export competition power and creating employment opportunity as long as it puts forward reasonable policy to control the risk and correspondingly.