A Study On The Impact Of FDI On Business Cycle Co-movement Between China And The Major Countries

Business cycle co-movement is change phenomenon at the same time or a difference of a certain time difference between a country's business cycle fluctuations and fluctuations in economic cycles of other countries. Since the 20th century, along with the rapid economic growth and overall national strength of various countries, each country's business cycle fluctuations had the prevalence of co-movement. Since the world financial crisis in 2009, economic growth of the industrialized countries fell to the lowest point over the past 20 years, while the economic downturn around the world, and spread to every country, so scholars also increasingly attracted more and more attention to degree and channels of business cycle co-movement between countries.Foreign direct investment, which researchers commonly referred to as FDI, is the investment made by the residents of investing countries, aimed at to establish a lasting interest with companies of the host country. Lasting interest is the long-term relationship and foreign direct investors have a certain impact on the company's management. Statistically speaking, at least 10% of the common stock ownership or voting rights is a precondition for direct investment relationship. Less than 10% common stock ownership is called portfolio investment. FDI includes not only mergers, acquisitions and new investment, but also to re-invest, loans and similar transfer of assets between the parent and subsidiary. In recent years, as the world capital flows among countries to strengthen, total global FDI growth has the accelerated trend, and have more and more significantly impact on the economic cycle of the various countries, so some researchers began to pay attention to the impact of FDI on the economic cycle fluctuations. Previous empirical studies related to FDI are usually of enterprise level data, mainly related to the long term impact on the supply of the host country, focusing on technology transfer, management techniques and business models. This article focuses on another important aspect of FDI, that is, the economic impact of FDI in the process of cross-border spread of the role, this paper test relationship of the rapid development and economic Co movement through demonstration in the bilateral FDI data between China and major countries.The beginning of the article is introduction, which provides information on the topics background and significance of topics, and descries research contents, methods and structural arrangements of this article. Business cycle is an inevitable phenomenon in the process of economic development of all countries or regions, which to some extent can reflect the status of a national economic development. Since different countries have suffered the impact of different types, business cycle fluctuations of various countries in the world has shown a greater difference in the characteristics. But With the rapid development of national trade and international capital flows, the rapid development of the deepening of economic integration, the characteristics of business cycle fluctuations of various countries in the world not only show their own characteristics but increasingly show the synchronization relationship.The first chapter is the economy co movement theory research. First introduced the business cycle co-movement's transmission mechanism. Factor which affects business cycle co-movement has two categories: exogenous conduction mode and internal transmission mode. Exogenous conduction mode includes war, climate change, technological progress, natural disasters and so on; internal conduction mode includes the stock market, direct investment, exchange rate system and so on. Next, from trade, finance, economic policy and the economy other channels introduced Co movement of transmission channels. International trade can affect trade cooperation country's economic cycle fluctuations from the following two aspects: first, increased integration of world trade in various countries can promote the production of specialized, so the industry shock will take all countries with high economic cycle independence; Second, trade between countries increased and expanded transmission channels of shock between cooperation countries, which can lead to the improvement of the economy Co movement. Financial integration may lead to the improvement of the economy Co movement through the demand channel, while it may have in turn led to various infectious impact of macroeconomic volatility spillovers between countries increased; but financial integration may also reduce the economic cycle Co movement through industry specialization.The second chapter describes the traditional theory of FDI and China's FDI status quo. This chapter first gave a brief description of FDI. Foreign direct investment also is known as international direct investment, foreign direct investment and foreign direct investment. In general, from the investor point of view is called the foreign direct investment; from the perspective of the host country is called the foreign direct investment. International Monetary Fund defined foreign direct investment as "To be able to be sustained from a foreign business interests and investments in the enterprise, the purpose is the management of the enterprises with the actual voice." And then the article describes the traditional theory of FDI: 1, Enterprise Advantage; 2, internalization advantages theory; 3, regional advantage; 4, eclectic theory of international production. Finally this chapter introduced the current situation of China FDI from internal and external FDI. China has been very successful in attracting foreign direct investment, and has become the largest of developing countries which attract investment. Foreign direct investment of Chinese is at a relatively high level in developing countries, but compared with developed countries still has a very big gap. With the deepening level of China's opening up, China's foreign direct investment is also increasing rapidly.The third chapter describes business cycle co-movement Index measurement and panel data model. In order to analyze the relationship between business cycle co-movement and its influence factors, this article used fixed sample lengths rolling correlation coefficient to examine business cycle co-movement. Before introducing the rolling correlation coefficients, this chapter describes what the first band-pass filter based on the cycle of elements of the separation method. Then the article gives a brief introduction about panel data model. Panel data refers to the time series and cross section data together to analyze the same observation point in different samples and samples of the same observation conditions in different points in time, panel data has the advantages of time series and cross section data. The fourth chapter describes a study on the impact of FDI on business cycle co-movement between china and the major countries, including analysis of business cycle co-movement change and empirical results analysis of the relations of FDI and business cycle co-movement. Business cycle co-movement between china and the major countries show the trend of first raised and then decreased during the period 1988-2009. Prior to 1997, Business cycle co-movement between china and the major countries show gradually decreasing trend. After 1997 with the deepening of China openness, Business cycle co-movement between china and the major countries gradually rise, and growth is very fast. Empirical results show that there is a significant positive correlation between FDI intensity and Co movement of China and major countries, the greater is FDI intensity between the two countries, the higher is the economic cycle co movement between them. In mutual communication process of business cycle between China and major countries, in addition to trade FDI has become a separate way, and more and more dominated.