Effects On Home Country’s Industry Structure Of Industry Choice Of China’s Outward Foreign Direct Investment

In the background of the growing trend of economic globalization, many countries have used outward foreign direct investment to achieve the international transfer of domestic industry structure.The industry structure adjustment in international accompanies with OFDI. Therefore, how to make good use of this new opportunity of internationalization and optimize the choice of foreign direct investment in industry is critical for China to improve its domestic industry structure and the international competitiveness of its enterprises.This paper studies on the effects that China’s OFDI industry selection on the domestic industry structure in order to find out the best OFDI industry in China to promote and perfect its domestic industrial structure. Using cross-sectional data from OFDI stock of top ten provinces in China, introducing an index to value industrial structure-a revised level coefficient of industrial structure, the paper chooses China’s four main OFDI industries (mining, manufacturing, wholesaling and retailing, leasing and business services) to analyze the correlation coefficient between their investment stock quantity and the revised level coefficient of industrial structure to study the different effects that different industry selections of China’s OFDI on the industry structure.The empirical study shows that there is a negative correlation between the adjusted level of industrial structure and the OFDI industry in mining, leasing and business services.Wholesale and retail trade makes positive effects on the adjusted level of industrial structure.What’s more, its effect is much more apparent than that brought by the advantageous industry-manufacturing industry. Therefore, the current Chinese OFDI industry selection is not good for its domestic industrial restructuring.The industry choice of OFDI in China is facing these problems:weak industry diversion effects, weak industrial linkage effects, and insignificant reverse technology spillover effects. Therefore, this paper puts forwards some policy recommendations for Chinese OFDI industry choice, based on the problems brought by OFDI industry choice affecting on domestic industrial restructuring.