An Empirical Study On Effect Of Foreign Direct Investment To China’s Economic Growth, Foreign Trade And Employment

Since the reform and opening，China has always attached great importance to FDI topromote the development of China’s economy. As of2011，the stock of foreign investment inChina is estimated to reach$712billion. With the huge amounts of FDI inflows，brought bothpositive and negative impact to the country’s economy. Therefore，it is necessary to have anin-depth study of the impact of FDI on China’s economy.On the basis of the summary of the theory of FDI，by using time sequential data fromstatistical data (1985-2011)，simple combing the course of development of FDI in China，andfrom the source structure，investment form，industrial distribution and the geographicaldistribution to analyze the characteristics of China’s use of FDI，at the same time described thereasons.First，this paper reviews the development of FDI and analyze it’s characteristics. Then wetry to use empirical analysis to study the effects of FDI to china’s economic growth foreigntrade and employment. The findings of this paper are as follows：(a)there exists a long-runequilibrium relationship between FDI and economic growth.FDI has positive effect toeconomic growth，in turn economic growth helps to increase FDI，so there is a two-waycausation between them.(b)a long-run equilibrium relationship exists between FDI andimport and export volume.(c)FDI raises employment rates by creating more jobs.Finally，on the basis of the above analysis，some advice will be provided to make betteruse of FDI.