The Analysis Of The Influence On Chinese Bop By Fdi

Since be open to the outside world, import and export and foreign direct investment has been the important drive on the increase in high speed of Chinese economics. FDI effects on Chinese scale of import and export, the structure of industry, the exploit of international market, the management of enterprise and so on. First, FDI promotes the form of capital, employment and the upgrade of the structure of industry. It has been an important factor of internal balance in our country. Second, the inflow of FDI speeds up the development of Chinese foreign trade, and effects on the structure of our foreign trade and the balance of capital and financial account.There are many scholars are paying much attention to the problem of the influence of FDI on Chinese economics since FDI comes into China. These researches are more about the internal balance but not external balance. In recent years, China becomes one of the developing countries which attract the most FDI in the world. FDI in China lasts many years and influences on Chinese BDP without question. So studying the influence of FDI on Chinese BOP is essential.This paper begins with the development of FDI in China, combines the fact of FDI attracted by us and our BDP, looks for much data, and carries out qualitative analysis on the effect taken by FDI on our BOP. Then we know that FDI increases the surplus of Chinese trade. But because of the high yield rate of FDI, it brings a deficit to the income account and then pressure on the current account. The continuously inflow of FDI is an important reason of the capital and financial account surplus in Chinese BOP. The final conclusion is that FDI is an important reason of our BOP surplus. So this paper advances some suggestion to Chinese introduction FDI policy.This paper is constituted by five parts as follows:The first part describes the related theories review. There is a theoretical review for the influence that FDI have on the host country. Through the review, a general concern can be seen that FDI can promote the economic growth and improve the industrial structure via promote local capital formation, improve export and creating job opportunities.The second part introduces the development and new pulse of FDI in China. It mainly contains two facts. One is that FDI gradually turn to the main format in which we make use of foreign capital. The other is that FDI is over-emphasizing in Chinese second industry, less investment in the first and third industry. The third part analyses in details how FDI effects on current account via goods and income account. Firstly, considering of the relationship between FDI and foreign trade, this paper analyses the import and export of the foreign enterprise and concludes that FDI increases the surplus of Chinese trade. But Chinese trade surplus is actually not so high, because some of the export of foreign enterprise actually cannot be taken into Chinese export. Secondly, this paper compares the yield rate of FDI in China and Chinese domestic direct investment, and then deems that it brings a deficit to the income account and pressure on the current account.The fourth part firstly describes the four stages of Chinese capital and financial account changing, and then analyses Chinese domestic direct investment. Finally this paper concludes that the inflows of FDI have been the main reason of our capital and financial account surplus. But compared with the large scale of FDI inflows, Chinese domestic direct investment is relatively small. So we must encourage domestic direct investment, reduce the capital and financial surplus and adjust our BOP.The fifth part gives some suggestion. Firstly, we should limit some FDI inflows speculated in China, improve the quality of FDI, and optimize the structure of FDI. Secondly, we must enlarge the channel of Chinese domestic direct investment, encourage Chinese domestic direct investment. It can not only reduce the difference of the yield rate between FDI in China and Chinese domestic direct investment, but also reduce the capital and financial account surplus. Finally, we can realize the equilibrium in the balance of payment.