The Research On Trade Scale Effects Of China’s Outward Foreign Direct Investment

Outward foreign direct investment is an important indicator to measure a country’s degree of openness and also a significant embodiment of international competitiveness. Its changes can reflect a country’s position and influence in the international value chain. Since the new century, China’s outward foreign direct investment has become a hot research issue, especially a series of economic effects resulting from China’s outward foreign direct investment, such as:foreign trade effects, technology spillovers, terms of trade effects and so on. International trade, as another measurement of a country’s degree of openness develops earlier than outward foreign direct investment in china, and is ranked in the national economy "troika". The importance is self-evident. The study of foreign trade effects of outward foreign direct investment, especially the trade scale effects is of great practical significance. Trade scale effects resulting from outwards foreign direct investment is a complex economic process. For now, there are mainly two hypothesizes:alternative hypothesis and complementary hypothesis. The majority of scholars support the complementary hypothesis. Most of the researches about our country are based on the following perspectives: macro level and micro level. Few studies are based on industry level. I believe that all sectors of the industry themselves have distinctive characteristics and the imbalance existing in our overall economic development is significant especially in the aspects of the industry, so the research about trade scale effects of outward foreign direct investment based on the industry level is particularly important.Considering the industry statistical standards is not unified in outward foreign direct investment and foreign trade, we first refer to relevant academic literatures and re-classify industry sectors according to the characteristics of the industry, then determine three major industries and the corresponding eleven sub-sectors. Then, we make theoretical study and analysis on the trade scale effects of outward foreign direct investment in three major industry sectors, and finally, based on the modified gravity model, we make an empirical analysis in use of eleven sub-industry sectors panel data. The results show that:Firstly, based on the industry perspective, China’s outward foreign direct investment and international trade is not alternative, but complementary. Secondly, China’s outward foreign direct investment has a slightly stronger effect on export trade than on import trade. Lastly, the stock of China’s outward foreign direct investment has a stronger effect than the flow on both import and export trade. At the same time, we find there are industry differences in import and export trade random effects of outward foreign direct investment. Among the eleven industry sectors, forestry, animal husbandry and fishery, mining and quarrying, manufacturing, transport and storage, hotel, restaurant and Gurism and other business services industry belong to the high import and export trade effects group. Electricity, gas, and water supply industry, culture, sports and entertainment, information transmission and computer services, construction and real estate, government services belong to the low import and export trade effects group.