The Impact Of Apperciation Of RMB On Foreign Direct Investment In Jinan

Foreign Direct Investment (FDI) provides additional support for a country or a region’s economic development, while the exchange rate has a significant impact on FDI. In the context of the appreciation of RMB, many scholars have aroused the interests of the impact of RMB exchange rate on FDI.As the capital of Shandong province, the city of Jinan has an important economical position in Shandong province, so the FDI in Jinan has a strong representation. This article has empirical research on the impact of RMB exchange rate on the FDI in Jinan.This article uses the data of1993-2010, building empirical model based on former scholars’ achievement, to research the impact of RMB Real Effective Exchange Rate (RREER) on the FDI in Jinan. Meanwhile, we also study the impacts of Average Wage Level (AWL) in Jinan, Gross Domestic Product (GDP) in Jinan, Import and Export (IE) in Jinan on the FDI in Jinan. Empirical results show that, no matter short-term relationship or long-term relationship, RREER, AWL, GDP and IE are significantly related to FDI in Jinan, but the relation in the short and long term is inconsistent. In the long term, RREER and AWL have positive relations with FDI in Jinan, while the short-term is opposite. The rise of GDP in Jinan has a negative impact on the FDI in Jinan. In short-term, we can see that RREER has the greatest impact on the FDI in Jinan through variance decomposition. In long-term, AWL has the greatest impact on the FDI in Jinan, while RREER also has significant impact on FDI in Jinan. The GDP and IE in Jinan have relatively smaller impacts.This article believes that Jinan should actively response to the impact of RMB appreciation on FDI in Jinan and prepare to make up the gap after the declining of FDI. At the same time, Jinan should keep AWL steadily growing and actively adjust the wage structure.