A Study For The Trade Effects Of China's OFDI

Nowadays, FDI plays more and more important role in international economy, which can dynamically affect a country's economic growth, balance of international payment, industrial structure adjustment, enterprise competence and sustainable development. China's 30-year reform and opening not only achieves remarkable success in economy development, but also with some barriers and problems following up, where outward foreign direct investment can be one of the most effective tools to deal with the negative factors. Under this background, how to improve China's economy development through OFDI? Will OFDI substitute trade? And how should Chinese government make policy and take measures to motivate the development of OFDI? These are all the"Going Outward"Strategy need to fix out.This paper aims to prove the relationship between international direct investment and international trade through the deeply study of the trade effect of China's OFDI, and come up with policy suggestion according to study results. Theoretical study and empirical analysis are combined in the study, while concludes the reasonable way for China's economy development based on the reference and comparison of international direct investment and international trade relationship theories. Regarding to China's specific situation, an empirical analysis focus on the effect of OFDI is leveraged in investment motivation, industry differences and area difference. Finally, the study find out: different type of investment, different industry of OFDI and different area for invest will make different effects to China's trade, but in general the development of OFDI improves the development of trade. However, because of the intense competition in global market and the worse trade conditions, it's urgent for China to take OFDI strategy. Therefore, our government must cooperate with industry associations and enterprises to make long-term feasible"Going Outward"strategy, following with relative measures to launch OFDI, which will increase our comprehensive competence, keep economy's sustainable development, and make achievements in both investment and trade.