The Study Of The Problem Of Two-way Direct Investment Between China And Asean

Foreign Direct Investment doesn’t flow from developed countries into underdeveloped countries or developing countries any more. The FDI of regions has played an important role in eliminating poverty, advancing the economic integration, construction of infrastructural facilities and diffusion of science and technology in ASEAN members. Marked by the China-ASEAN Economic Cooperate Framework Agreement, China-ASEAN Free Trade Area was founded on November4th,2002and started on January1st,2010formally. As the construction of China-ASEAN Free Trade Area deepens, not only will the CAFTA promote the intraregional adjustment of industrial structure and resources optimization deployment, but also it can improve the economic efficiency and competitiveness of the ASEAN members. It has a far-reaching economic and political meaning about promoting the direct investment between China and ASEAN. From provincial angle, it influenced greatly to Yunnan, the Bridgehead for China and ASEAN economy and trade cooperation.Therefore, based on the theory of Direct Investment, firstly, the thesis analyzed the current situation of bilateral direct investment, periodic analysis, industrial structure, nationality analysis and investment motivation guide in China-ASEAN. Then, the paper researched the investment effect, influencing factors and causal analysis of China and ASEAN bilateral direct investment as a whole over gravity model under the framework of CAFTA. Secondly, it narrowed the study. From provincial angle, it researched the current situation of bilateral direct investment of Yunnan province and ASEAN, and the direct investment effect on Yunnan province under the cooperation of China-ASEAN Free Trade as well. At last, this paper referred to policy suggestions in view of differing cases in China and Yunnan province. From the above, the conclusion is summarized:1、China-ASEAN level. On one hand, the annual flow of foreign FDI is unstable. China has been through investment depression, recovery, stable growth and rapid increasing period. Chinese companies pay much attention on invest manufacturing, power development, wholesale and retail trade, mining and so on to ASEAN. The investment motivation is mainly about resources-orientation, marketing-orientation, efficiency—orientation, policy-orientation and exchange rate-orientation. On the other hand, as the host country, there were very few investment projects by the10-member ASEAN in China. Meanwhile, the ASEAN countries investment in China was about few big projects, financial sources focused on old members, ASEAN investment in China concentrated on manufacturing and mainly in southeast cities.2. Yunnan-ASEAN level. The annual flow of direct investment from Yunnan province to ASEAN is growing at a high speed. The investment focused on the development of natural resources and cooperative investment of agriculture. The investment from Yunnan to neighboring countries is "alternative development" investment. Almost every surrounding countries involved cooperative processing of agriculture. Furthermore, Yunnan province played the host. In view of the overall situation, Yunnan hardly received the foreign direct investment, the investment from ASEAN to Yunnan has seen a whirlwind of ups and downs. Among foreign direct investment to Yunnan, manufacturing was the largest contributor.3. By the positive analysis over investment gravity model, we found the effect of increasing bilateral investment in China-ASEAN and Yunnan-ASEAN is limited after the establishment of CAFTA. The reason of which lies in the following aspects. First, the members of CAFTA differ in development of economy. Second, the industrial structure is unbalanced between China and ASEAN members. At the same time, the results suggest that economic aggregate of foreign investors promoted obviously to international investment. The greater economic aggregate of the investors possess, the more capitals they have, the potential of investment will be more enormous. China is a developing country in particular, which advantages in labour force, resources and so on. It’s also one of the main destinations of international industrial transfer (IIM). The different levels of income is beneficial to attract investment of developed countries. There are a number of spare capitals in a high level of income countries, which have a great capacity for overseas investment. The economic scale and economic level between foreign investors and host countries are closer, the flow of international direct investment to host countries is higher. The farther apart, the FDI flow is less. At last, geographical position is also an important factor on the flow of direct investment of foreign investors to China.In policy suggestions part, aimed at the different situations of China and Yunnan province, we put forward the policy suggestions about "going out" and "introducing". It has great importance to investment cooperation of Free Trade Area with the better involvement of China and the bridgehead strategy of Yunnan and promoting China and Yunnan to be in sound and rapid development.