A Study On Interaction Between FDI And The Balance Of Trading Of China

Along with the security FDI scale to extend continuously ,FDI has more and more important effect on China's trade equivalence directly and indirectly. On the one hand, domestic investment and FDI increase sharply, on the other hand the trade balance increases to a huge extent.This essay focuses on the relation of the two phenomena and analyzes the influence of FDI on the balance of trade. If there is real influence, What are the main channels? This essay constructs the equilibrium mathematical model about the influence of FDI, domestic investment and foreign exchange rate on China international trade, and empirically analyzes the influence by the model of VAR and variance decomposition. This thesis studies the FDI effect on China's import, export and trade equivalence through figure out the contribution rate of FDI to China's import, export, trade equivalence and the independent rate of import and export. Considering the difference of FDI data, the author choose the data of truth FDI amount from 1982 to 2005. Domestic investment amount equals to domestic fix assets investment minus FDI amount from 1982 to 2005. As far as methodology, we adopt relevant analysis and multi-variety regression for analysis. Study conclusions are as follows: (1) FDI has a strong contribution to China's import, export and trade unequivalence, and the contribution to China's export is greater then the other two. (2) FDI has a negative effect on China's import and a positive effect on China's export. (3) The co-integration relation between FDI and China's trade unequivalence is apparent, and FDI is the reason of China's trade unequivalence. (4) The FDI effect on China's trade unequivalence is caused by its effect on export, import and the mutual effect of this two. (5) FDI has a greater effect on independent rate of import then the domestic investment effect on independent rate of import. FDI has a positive effect on independent rate of export, and has a negative effect on independent rate of import. (6) It is apparent that FDI cause China's trade unequivalence according to the analysis on FDI effect on China's import, export, trade unequivalence, independent rate of import and export.At the end, this paper takes on the reason analysis, and put forward some policy suggestion. There are some mayor suggestion ;implementing a pro-active import policy ;improving the labour costs of export commodities ; improving resources and environment costs of export commodities; changing taxes on exported goods ; improving the Using foreign capital policy and the processing trade.