The Study Of Market Demand Factors Influence On FDI Of China’s Service Industry Inflowing

With the world industrial structure tilted towards the services industry,the focusof global international direct investment has gradually shifted to service industry,theFDI of service industry developed rapidly,which has become a new engine ofinternational direct investment.With China’s entry into the WTO,the country fulfilledthe implementation of WTO commitments,and gradually increased the degree ofopenness of service industry,also relaxed market access conditions,the scale of FDI inChina’s service industry is growing rapidly,the focus of FDI gradually shifted towardsthe China’s service industry.it’s true that getting more and more FDI of serviceindustry can effectively compensate for the gap of capital and technology,increase thecompetitiveness,quality and the structure of the service industry,which is crucial andsignificant to the service industry development in China.Based on the detail review of theoretical and empirical literature,and combinedthe FDI and Location Theory,this paper analyzed the question of FDI in serviceindustry location choice from a new perspective based on the market demand.Thispaper construct the urban-rural income gap and household consumption levelvariables to represent the market demand and choose21provinces in China during2000-2010and use panel data model for regression analysis.The research results showthat the market demand factors measured by urban-rural income gap and householdconsumption level is the most important factors for service FDI inflows,in which theurban-rural income gap has a significant negative impact on service FDIinflows,while the household consumption level has a positive affection on service FDIinflows.In addition,we divided into eastern and middle-western areas to research,wefound the urban-rural income gap has a greater negative effect on service FDI inflowsin eastern,while the household consumption level has a greater positive affection onservice FDI inflows in middle-western.Finally, on the basis of above findings and the basic rules of service FDI andmarket demand,we put forward appropriate policy suggestion as below:measures tonarrow the gap between urban and rural,method to improve the householdconsumption level,strategy to speed up the pace of the middle-western attractingservice FDI inflows.