China's Utilization Of Foreign Direct Investment In Appropriate Scale Analysis

In recent years, the inflow of foreign direct investment into our country has been maintaining a stably increasing status. In 2002, the quantity of really utilized FDI amounted to 52.7 billion US dollars, which ranked the first in the world. The major purpose of using FDI is to serve the national economic construction just as to introduce advanced technology and management experience, utilize the domestic labor and natural resources and amplify the foreign exchange earned by export. However, the direct purpose of foreign investors is to make the maximum profit, which is quite different with our aim to use FDI. Although the inflow of FDI has made a lot of contribution to our economic development, financial income enhancement, economic structure improvement, employment and foreign exchange promotion caused by export, it also has made some negative effects such as national capital missing and environmental pollutions.It's undeniable that in a certain period, theoretically there should be a suitable scale of FDI for a country or district, if the scale of FDI is too small, it can not help the national economy effectively, while if the scale is too large, it will bring too much negative effects to our economy and may threat the safety and privilege of our economy. Therefore, the research on the suitable scale of FDI inflow has a great theoretical and practical significance.The first part recalls the history of the utilization of FDI and analyzes the benefits to our economic and social development as well as the negative effects.The second part gives the definition and characteristics of proper scale of FDI and the critical elements as well as some indices to judge the proper scale, and analyze the proper scale of FDI by the methods of traditional economics-marginal analysis and supply-demand model.The third part compares the FDI scale in China with other developed, developing and newly born industrialized countries. By the international comparisonof FDI inflows and FDI stocks, the weight of FDI in gross domestic investment and FDI Performance Index it gets the conclusion that the scale of FDI is a little too high. Then by the method of regression it predicts the scale of FDI in the next few years.In the forth part on the base of above analysis the author put forward the concrete suggestions, which mainly contains promoting R&D of international companies vigorously, adjusting the regional structure and industrial structure of FDI and protecting the privilege and safety of our economy.