On The Employment Effect Of Foreign Direct Investment In China

With the economic development, the size of FDI in China is expanding. China has become the largest foreign direct investment inflow country among developing countries and regions in the1990’s and become the world’s NO.1in2003. Nowadays the economic difficulties and uncertainties in the world bring challenges for China to attract foreign investment, since2012China’s FDI inflows have declined, but the latest world investment prospects annual survey report from UNCTAD shows that China is still the most attractive economies on FDI.China has nearly13million people, which is the most populous country in the world. In the process of the market economy in China, the employment problem has become a very serious social problems faced by the Chinese government. Since the reform and opening, foreign direct investment has played a key role in promoting China’s economic growth and employment. The inflow of FDI has made some contribution to the country’s employment, but some changes has appeared as the FDI inflows are expanding its size, like the structure, capital and technology content in investment, so the FDI impact on employment is changing too. Therefore, in order to have a better understanding of FDI and China’s employment relationship as well as to promote its positive contribution to our employment, it is very necessary and meaningful to have an in-depth study of the FDI’s combined effects on employment.Currently, we have an endless stream of studies on the relationship between FDI and economic development in China, but not so much on FDI’s effects on employment. Most of the existing research focused on the empirical analysis of the total employment, so there is no adequate research on industrial employment, regional employment, the quality of employment, country comparisons in employment effects and negative impact of FDI on employment. In this paper, I will use qualitative analysis and quantitative analysis, combining with normative analysis and empirical analysis to study FDI’s effects on employment. The study contains different aspects of employment, like total amount, industrial structure, regional structure and quality. In addition, the state-space model will be used to study FDI’s impact on employment in different periods. Furthermore, the country comparison will be introduced. Singapore is Asia’s representative developed economies and export-oriented as china, and the old days in Singapore is similar to today’s China, the comparative analysis of the industrial employment effects of FDI in China and Singapore is trying to make the study more systematic and comprehensive.After the study, we can draw the conclusion that:FDI makes a positive contribution to the growth in China’s total employment, helps us to promote the upgrading of industrial structure in China as well as stimulate the industry distribution of employment, accelerates our flow of the labor market in different regions and improve the quality and wage level of workers in China. In general, FDI has played an important role in promoting our overall employment quality. In addition, FDI makes a positive contribution to the growth of employment in Singapore who achieves economic transformation earlier than China. Therefore, in the foreseeable future FDI will continue to provide a positive employment effect to china who is facing restructuring and development. Furthermore, we can learn a series of measures and policies in Singapore to promote employment in the use of FDI. But we can’t ignore that the serious tilt of the investment structure, the transformation of investment mode and the improvement of capital’s organic composition has brought some negative impact to our employment. So at the end of this paper,I will make some policy recommendations on how to use FDI to stimulate the growth of employment in China actively and effectively.