The Effect Analyses Of Foreign Direct Investment (FDI) To China’s Foreign Trade Commodity Structure

With China’s open policy strengthening and the continuous development of its economy, China has achieved fast growth in its foreign trade and the utilization of foreign direct investment (FDI). The interrelationship between foreign direct investment and foreign trade has increasingly drawn much attention due to the increasing amount of FDI, emergence of multinational companies and the deepening of international specialization. Inflow FDI has developed very fast and gradually spreads into different industries and regions of China, and plays an important role in prompting the development of China’s foreign trade. At the same time, the development of China’s foreign trade can be influenced by inflow FDI; the impacts of FDI are not only to the quantity, but also to the structure of foreign trade. So does the inflow FDI in China have any impact to China’s foreign trade commodity structure? Is there any relationship between FDI and trade structure transformation? The answers to these questions will be the test of FDI policy efficiency and the reference to future FDI policy’s making and implementation for China.This paper characterizes the varieties of inflow FDI and China’s trade transformation and relationship between FDI and China’s trade structure promotion. Based on the analysis of historical statistics data, we found that the total amount of FDI increased, industrial distribution improved and China’s total exports and imports of goods increased year by year, also the development of export and import commodity structure a improved to some extent. Qualitative analyses found China’s foreign trade structure made a significant optimization in the twenty years, in which FDI has played an important role in this transformation. And then, use the econometric models of FDI in China in recent years and China’s export and import commodity structure to make a quantitative analysis. The conclusion is that there is a long term and equilibriums relationship between inflow FDI and trade structure reformation of China. Finally, based on theoretical analysis and empirical research findings, series of policy suggestions about how to further take advantage of FDI have been made, in order to promote foreign trade commodity structure optimization.