Research On The Relationship Between Exchange Rate And Foreign Direct Investment Of China

Foreign direct investment inflows about exchange relationship, in the 1980s, some scholars have summarizes related theory: labor cost utility theory and wealth utility theory. Relative cost effectiveness and wealth effect reveals the exchange rate changes the influence of foreign direct investment and, on the other hand, is due to currency causing relatively costs rise and make foreign direct investment, on the other hand is reduced because of currency appreciation of actual have led to investor in host countries and lead to increased FDI inflows of capital increase. While in our country since the reform and opening up, especially after China adopts the floating exchange rate system, changes in the exchange rate and exchange rate fluctuations in FDI inflows to the influence is clear, how to use the move makes our FDI inflows increase has become our problems needed to resolve. However, at present, China's domestic about research exchange rate and foreign direct investment and the article less influence, less. And so it is necessary to carry out a further study.In this paper, first introduced the thesis research background, and then briefly discussed, and the related theory of FDI in research at home and abroad the influence of foreign direct investment rate of related theory. At the same time, use data, diagrams introduces the present situation of FDI, including: the structure of the development course, FDI related information. From the existing literature material, we can see, based on different analysis theory to different countries and between different periods of capital flows and even the FDI flow form of empirical analysis, and domestic and foreign scholars and FDI on the currency of the study's conclusion that the relationship between the same. This paper mainly selection from 1994 to 2009 RMB actual and effective exchange rate and China's actual on FDI annual data, the empirical analysisEmpirical part econometric modeling, adopted through unit root test, cointegration test and vector error model to estimate that Chinese yuan, real effective exchange rate changes to our country foreign direct investment impact. Finally, according to the empirical part of the conclusions: (1) RMB actual and effective exchange rate to our country foreign direct investment inflows of greatly promote the overall role; (2) for the second industry into our country foreign direct investment RMB actual and effective exchange rate have negative effect; (3) for the third industry into our country foreign direct investment, the RMB actual and effective exchange rate have positive effect. Finally, are given respectively from the following aspects in effective use in China with foreign direct investment this link policy advice. Specific aspects as follows: the starting from the RMB exchange rate stability, formulate relevant policies. Through increased frequency two-way "to picture more adaptable to let the yuan float" exchange rate fluctuation, thus increasing the inflow of foreign direct investment in China. Through the implementation is also open strategy and talents, and attract foreign investment in China.