Theoretic And Empirical Study On China's Foreign Direct Investment Under The New RMB Exchange Rate System

Foreign direct investment originated in the 1870s, FDI has evaluated more than a century. Capital flows have had a far-reaching impact on the international competitiveness of enterprises, industrial restructuring, the international balance of payments, as well as a country's sustained economic development by multinational corporations as the vector in the world. Economists start to consider about the FDI. In an open economy, the exchange rate is Proportion of two currencies. The exchange rate decided relative prices of goods and factors of production at home and abroad, thus determined FDI flows and the scale .So FDI became an important factor in international direct investment.The late 1990s, in the face of the in-depth development of economic globalization trend, the Chinese government proposed the implementation of the "going out" strategy for adapting the industrial structure adjustment and sustainable development of all aspects of economic. The Chinese government encouraged comparative advantages enterprises of all kinds of ownerships to do foreign direct investment, and go on multinational operations. And The Chinese government promoted China's powerful enterprises continues to grow and develop through foreign investment. Since implementing of the "going out" strategy, China's foreign direct investment has grown rapidly and Chinese enterprises gradually became a new force in global direct investment fields. The RMB exchange rate was indispensable factor in China's foreign direct investment.Since July 21, 2005, China implemented referencing "basket" currency. The strategy can be called a managed floating exchange rate system. China's foreign direct investment was changing under the exchange rate system changing constantly; especially China's foreign direct investment is looked forward to faster developing under the managed floating exchange rate fluctuations increasing circumstances.This article analyzed from two aspects, first, the change of the exchange rate regime impacts on China's foreign direct investment, second, the fluctuations of the RMB exchange rate to increase expectedly impacts on China's foreign direct investment. This article lets the RMB exchange rate system reform in July 2005 as segmentation. This article explores the RMB exchange rate factor on the impact of China's foreign direct investment through analysis of China's foreign direct investment after the reform of the exchange rate system. In order to enable Chinese enterprises can be in the draw in foreign direct investment; this article sets out the issues what Chinese enterprises should pay attention to in foreign direct investment in the final.