Study On The Relationship Between The Fdi And The Residents' Consumption

Since the1980s, China begun to introduce foreign investment actively.Foreign direct investment played a huge role in China’s economic growth.But in recent years, the co-existance of China’s sustained economic growth rate and low consumption rate,which is not it is not conducive to the healthy development of China’s economy,has drawn great attention across the country."Suzhou model" seems to be a true portrayal of this phenomenon.Some scholars pointed out that FDI had caused the imbalance of the local industrial structure, triggering the crisisof marginalization of local enterprises.Thus from the perspective of reducing the profits of local enterprises inhibited the increase in the income of local residents so that consumer spending dropped. Based on empirical data of FDI and income status and consumer status,it is found that the level of consumption share of GDP is declining, while FDI inflows reduces the growth rate of income. In view of this, the problem of insufficient consumer in China has drawn great public attention, and taking FDI as one of the factors explained the causes of inadequate consumption.Many studies showed that the spillover effects of foreign investment on China’s economy had brought about economic development, but in the same time, some negative effects appear gradually, such as foreign investment has led to the expansion of the income gap in China, and government expenditure structure tilt distortions in factor prices. But whether the Chinese consumer insufficient has a certain relationship with the FDI?To this end, based on the domestic and international research, this article combined theoretical analysis with empirical analysis,according to practical situation,made a more systematic study of the impact of FDI on consumer spending. First, both positive and negative effects of FDI affect the consumer literature from a review based on the existing literature on the basis of summed up the two important factors to influence the effect of FDI consumption, income and level of social security, and on this basis proposed hypothesis:foreign investment income for the growth in consumption, but unreasonable income distribution and social security expenditure compression inhibited the growth of consumption, whether the two effects combined result of showing a negative relationship? Then, according to the preceding path combing through the use of two important variables are selected1990and2009, twenty years of provincial panel data econometric test results show that:FDI does not have a negative impact on consumer spending, on the contrary, FDI promots the expansion of consumer spending in a certain extent.The inadequate consumption may be due to problems caused by China’s internal system. To test the universality of the results, the paper also more representative of the "Suzhou model", Suzhou attract investment status, Suzhou City, the20-year time-series data to do an empirical test results show that the consumption of FDI on local residents certain extent, this result is also in line with reality, this result may be due to local policy-oriented.Finally, by analyzing the internal factors of the inadequate consumption, the author provides recommendations for the government to develop policies to attract foreign capital and to select a reasonable approach to development, including changes in foreign capital policy, to support the development of private enterprises, improve the employment situation, make a reasonable policy to distribute income, improve the social security system and the consumer credit market system.