The Trade Effects Of Japanese Direct Investment In Research

Japanese is one of the most important foreign capital origin countries and trading partners of China, the high-speed growth in the two fields of both Japanese direct investment in China and Sino-Japanese trade, has been an important character of Sino-Japanese economy relationship. Under the condition of globalization, it also has become a significant factor of Chinese economy development. Therefore, the study of the relationship between Japanese direct investment in China and Sino-Japanese trade, will undoubtedly be beneficial for Chinese government making rational policy to accelerate their development.From two aspects in the quantity and structure of trade, this paper has constructed the theoretical framework system to research the trade effect of direct investment. Then through carrying on descriptive statistical analysis for Japanese direct investment in China and Sino-Japanese trade will obtain the potential relationships between them. And based on this, this paper chooses the datum from 1983 to 2005 and uses co-integration test and regression methods to analysis the long-term equilibrium relationship between Japanese direct investment in China and China's imports and exports to Japanese after carrying on strict stable test on the variables' time series, and then uses error correction model to study their short-term relationship. The result indicates that Japanese direct investment in China and China's exports to Japan, Japanese direct investment in China and China's imports from Japan, both present the obvious co-integration relationship, in another words it shows that Japan's direct investment in China has creative effect on trade. And whenever in the long-term or short-term, it also shows between Japanese direct investment in China and China's exports to Japan has a two-way Granger causal relationship, but between Japanese direct investment in China and China's imports from Japan only has a single causality.Moreover, based on the relative datum from 1994 to 2005, this paper uses the method of Ordinary Least Squares to analyze trade structure effect of Japanese direct investment in China from two aspects—one is the Chinese export commodity structure to Japan, the other is the Chinese import commodity structure to Japan. And the conclusion is Japanese direct investment in China has optimized Sino-Japanese trade structure.