The Correlation Analysis Of Foreign Direct Investment And China's Export Trade

Since 1995, as China's foreign direct investment policy liberalized, there already have 400 multinational corporations, which in the word best 500 companise invest to China, the amount of foreign direct investment from 1.61 billion US dollars in1980 to 82.658 billion US dollars in 2007 representing an increase of 5,130 percent. At the same time China's export trade developed from 1985, the total exports of 27.35 billion US dollars to 2007, the total import and export of 1.21802 trillion US dollars, an increase of 4,400 percent; China's export trade structure has been significantly improved, from the 1985 exports primary products and industrial products 13.828 billion US dollars and 13.522 billion US dollars (about 1:1 ratio) to 2007's 242.98 billion US dollars and 712.84 billion US dollars (about 1:3 ratio).In the direct foreign investment in China and China's export trade development of the rapid development of China's export trade development will also face many problems: China's exports encountered anti-dumping several rising sharply, and January 1, 1995 to June 30, 2006, the total amount of 500 investigations, a total of 353 measures by the end, both ranking first in China's use of foreign abundant labor resources production and processing of a large number of foreign trade products, production of low value-added products are on the core technology has advanced strict protection; China's ecological environment, the living environment of foreign trade encountered initial processing of very serious pollution damage; massive foreign direct investment into China's real estate industry a threat to our livelihood, our security presence on the serious threat……etc..Therefore, the domestic scholars have two distinct points of view of foreign direct investment, one is restrict and the other one is encourage. This paper try to analyse and demonstrate the relevance of China's export trade and foreign direct investment,aim to give Chinese government some advance in setting foreign direct investment policy.The time-series data was chosen from 1980 to 2006, at first this paper gives a simple description of the situation on China's absorption of FDI and foreign trade exports, and has come to the preliminary conclusion of the relationship. Then, this paper gives a detailed empirical analysis on FDI and export volume of China's foreign trade and China's export structure.The way of analysis of FDI impact on China's export volume were mainly the Engel and Grange time series analysis method, which can give a causality test.Also the analysis adoped the corresponding regression model and error-correction (ECM) model. The results of the analysis show that FDI can promote China's export volume, but its promotion is limited.FDI's impact on China's export structure (the primary products and manufactured goods) tested by the use of conventional tests and covariance of the linear regression approach. Analysis results showed that FDI has significant influence to China's export trade structure. FDI's impact on the international outvie of China's export products (labor-intensive , resource-intensive and capital-and technology-intensive) tested by the indicators and empirical analysis method, the results showed that the impact on labor-and resource-intensive products was limited but very prominent to the capital-and technology-intensive products.Finally, the article also described three proposals of the development of China's foreign direct investment policy and corresponded implementation measures: (1) Increase the technical content and related industries of Foreign investment (2) Guide the investment invest to the central and western regions; (3) Restricted foreign investment's negative impact on exports.