The Empirical Analysis Of The RMB Exchange Rate Changes On China’s Foreign Direct Investment Effect

Foreign direct investment refers to the international capital transfers between enterprises to multinational operations. Chinese enterprises overseas direct investment began in the late1970s, it significantly speeded up after2000, the pace of "go global" grows very fast, foreign direct investment in China also has made considerable development.The exchange rate always receives great attention among the impact factors of foreign direct investment. This article hope to make a draw on to explore the impact of the RMB exchange rate of foreign direct investment to China’s foreign direct investment, and by drawing on international experience to make a reference to China’s foreign direct investment.This article is based on the classic theoretical analysis and introduced by the theoretical model on the basis of summing up the experience of Japanese foreign investment which derives that the appreciation of the Chinese yuan will promote China’s foreign direct investment, the increase in the rate of exchange rate fluctuations will reduce to some extent of China’s foreign direct investment.The empirical results show that RMB appreciation will promote the increase in foreign direct investment in China, while exchange rate volatility affects the opposite. Granger causality test showed that the real effective exchange rate and exchange rate volatility is the reason of China’s foreign direct investment, but in turn, does not hold. The virtual variable regression draw the two exchange rate reforms both had a significant impact on China’s foreign direct investment.The end of this article we summarize the characteristics of China’s foreign direct investment and exchange rate relationships, then based on empirical analysis result, we put up some policy recommendations on the development of China’s foreign direct investment.