| 1,Background and Significance In China, the strategy of the aggressive attraction foreign capital has been adopted since China's open. Since 1993 the inflow amount FDI is the first in the developing country, the only next to the first one American in the world. Currently, there are about 400 companies in the world 500 big company invested in China, involving many branch and realm in China's industry. Some industry which is restricted from foreign capital will be open, such as the finance, telecommunication, tour etc. The investment scope of FDI will be open widely continuously. A conclusion can be drawn from the development practice of many counties that the economic growth is a combination process of self-growth and the world's economic growth, so the China's economy development need adapt to the development of the world economy. Therefore, an aggressive exploitation of the funds, technique and management that FDI brings in and exerting the economy promote function to China have academic and practical meaning for China's economic balanced development and industry adjustment. 2,Content and Structure This paper point out that FDI will increase the surplus of China's Balance of Payment (BOP) in short term, but bring a deficit to the service and income account and pressure on the current account in the long run through analysis. The continuously inflow of FDI is an important reason of the Chinese BOP surplus. The surplus of BOP then produces the pressure of the appreciation to Renminbi. At the same time, FDI is over-emphasizing in China's second industry, less investment in the first and third industry. This also have the influence on the industrial structure of China presently. Therefore, FDI have a profound influence on the economic structure adjustment and BOP of China. This text is constituted by five parts as the following: The first part described the related theories review. Firstly, there is a summarizing of the FDI's concept from several definitions. After that, 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 analyzed the influence of FDI upon China's BOP. Firstly, Through the theoretical analysis of Monetary Approach to the Balance of Payments and BOP effect, a conclusion can be drawn that FDI will increase the surplus of China's Balance of Payment (BOP) in short term, but bring a deficit to the service and income account and pressure on the current account in the long run. Thus, FDI will improve the host country's BOP in short term and worsen it in the long run. Secondly, carried out the analysis to the output influence of FDI on the current account and capital account via table and data. The continuous inflow of FDI in big scale is a chief promotion to China's export increase and a basic power to maintain the current and capital account surplus. But with the circulation of investment, the profit remittance would be increase this will have a negative impact on current account. At the end of this part, analyzing the reason of investment deficit, its influence and trend. China's BOP will face an unbalanced risk in future was point out. The third part discussed the direct influence of FDI upon the exchange rate of Renminbi. Comparatively lower labor cost in China is the basic reason which attracting large-scale FDI, thus make a pressure of the appreciation to Renminbi through continuously surplus in BOP. If such situation, such as the lower labor cost, the trade mode focus on manufacturing export trade and large-scale FDI ,can not be changed that there will be a continuous influence on BOP surplus and appreciation pressure on Renminbi. The fourth part is a study about the influence of FDI upon China'seconomic structure. Firstly, a brief introduction about the FDI's scale, industrial distribution and regional distribution. Secondly, analyz... |
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