Based On Regional Comparative Analysis In The Negative Of FDI Spillover Effects

During the year of 1970s to 21st century,China got out the jam of funds shortage by the foreign direct investment, and, China utilized foreign capital and overseas markets to promote its economic growth and expand its economies scale . As to 2007,China has been utilized the foreign direct investment totally 760.219 billion dollars. But, as foreign direct investment played a strong role in economic growth, someone exaggerated the contribution of foreign direct investment and neglected its negative impact. As China's industrial restructuring and the improvement of their economic strength, the demand for foreign investment has gradually changed.With the above statement, this paper made the point of the negative effects of foreign direct investment, analyzed the pathway of negative effects of FDI,defined the meaning about negative effects of FDI, and used econometric tools to build a experiment with provincial panel data in China,explored the problems and reasons and finally put forward conclusions and suggestions.Through the analysis, the paper pointed out that irrational industrial structure of foreign direct investment, pollution in production processes, large grab tendency in marketing, frequently tax evasion were the main problems of FDI in China. To solve these problems, this paper put forward the relevant recommendations: 1st, use of legal means to mitigate the negative effects of FDI, includes regulating the production behavior of multinational enterprises with environmental law, and reducing the loss of state-owned assets with M&A law in cross-border mergers and acquisitions. 2nd, use of tax leverage to reduce the negative effects of FDI, includes cancelling differentiated tax standards, and building environmental taxes.3rd, use of a sophisticated system to reduce the negative effects of FDI, includes establishing fixed target and the combination of the soft environment for local government performance measurement, and implementing integrated monitoring system. 4th, use of market mechanisms to reduce the negative effects of FDI, includes perfecting financial systems, and guiding the FDI to the service industry.