China Service Industry To Attract Fdi In The Determinants Of Analysis

Nowadays, service has become the mainstream of global foreign direct investment. According to the new situation, the government will certainly loose the restrictions on foreign direct investment in service. This paper is designed to analyze the determinants of service foreign direct investment flown into China, and through this study, to make several suggestions according to our country's realities. This kind of study is generally based on the theories of Multinational Corporation. However, the theories of Multinational Corporation are mainly based on the studies of the foreign direct investment phenomena in manufacture industry. As a result, the paper represents the adaptability of this theory to service, and the conclusion is adaptation. Accordingly, we use foreign direct investment theory from manufacture industry to analyze the foreign direct investment of service.On the basis of detailed representation of theoretical framework related to the research, the paper makes the location determinants of service foreign direct investment into China. In order to make preparations for empirical study, I give general discription about location determinants and our country's location advantage. The paper gives econometric analysis through figure from finance, retail and transport to test the factors that influence the service foreign direct investment into China. As a lot of State-owned enterprises (SOEs) are not viable in the market economy, the government has to continue its control on the financial sector so that it can protect the failure SOEs with lower interest rate loans. This will influence the inflow of foreign direct investment. Consequently, we add the influence of SOEs. The result shows the service foreign direct investment has the positive relationship with market concentration of industry, scale Economy of industry, industry market scale, country's policy, and has the negative relationship with influence of SOEs. Moreover, SOEs's influence and market concentration are the most important determinants of service foreign direct investment to China. In general, the results prove the theoretical analysis.It must be mentioned that, on one hand, service foreign direct investment has positive effects on our country's economy. On the other hand, it also has negative...