Industrial Structure Adjustment Of China's Foreign Direct Investment Effect Research

With the rapid growth of economic globalization, outward direct investment (ODI) has become anecessity for enterprises to participate in international division of labor, adopt international managementand integrate into world economy. It has been an inherent requirement to speed up the adjustment ofindustrial structure, achieve optimal allocation of resources and promote economic self-reliance tomaintain macro-economic stability and follow principles of the Scientific Outlook on Development.Under the environment of open economy, the factors of production are free to be used to pursue profit;industrial structure adjustment can be achieved through international resources allocation and productioncross-border transfers. Thus foreign investment undoubtedly could be a useful way to upgrade domesticindustrial structure. As economy is more opened and comprehensive economic power improves,especially after WTO accession, Chinese outward foreign direct investment is also showing a rapiddevelopment of the new trend. It is believed that foreign direct investment is bound to become a shiningspot in driving China’s economic growth, plays an increasing role in transformation of the mode ofeconomic development and gives an important support to promote domestic industrial structureadjustment.At present, China is going through a critical period of changing strategic economic structure andfocuses more on foreign direct investment as it helps to optimize the domestic industrial structure. ThusChina should try to make use of FDI to push the transition of structure adjustment. International divisionof labor shifts to refinement phase which offers China better circumstances and opportunities to makeuse of foreign investment, enhance its position in the international production chain, and provide a newpath to upgrade the industrial structure adjustment. This paper will focus on China’s foreign outwarddirect investment industrial structure adjustment, based on the development reality and motivation ofChina’s foreign direct investment, tries to combine current needs of structure adjustment with economictransition, uses empirical analysis to test relationship between foreign direct investments with domesticindustrial structure and comes up with the research of following effect. Additionally, we try to give somepolicy implications to upgrade industrial structure adjustments for Chinese government based on ourresearch.