A Study On The Impact Of South Korea 's Direct Investment On China' S Economic Growth

The absorption and utilization of foreign direct investment is an important measure and also an important symbol of reform and opening-up in China. As of June2006, China’s actual use of foreign direct investment was more than650billion U.S. dollars. Foreign direct investment has had positive effects on China’s economic development. For example, the foreign direct investment effectively built up the funding shortfalls of China by increasing the capital stock and increase revenue sources; balanced China’s international balance of payments by increasing China’s foreign exchange supply; eased the pressure on China’s employment by absorbing China’s labor force; and also improved the local workers’ labor skills and the efficiency of production through the introduction of foreign advanced technology, management expertise, and the training of technical personnel; In addition, foreign direct investment in China also contributed to the rapid development of China’s international trade and the structure of China’s international trade and industrial. Foreign direct investment also had some negative effects when promoting China’s economic growth. For example, foreign direct investment in China is concentrated in the secondary industry, which is not conductive to China’s optimization of industrial structure; Foreign direct investment in China is mainly concentrated in coastal areas in the east, but central and western regions is relatively low, the imbalance of China’s increased investment in the regional structure increased the difficulties of the balanced regional development. Based on the review of foreign direct investment theory of the world and absorbing the outstanding research results in related fields, this paper discussed double impacts of foreign direct investment to China’s economy using a combination of theoretical and empirical research methods. Simultaneously, method of regression was used to measure the impact of South Korea’s foreign direct investment on China’s economy, especially tested the impact on the China’s economic growth. This paper presents that in promoting China’s economic growth, South Korea’s foreign direct investment in China was better than China’s overall absorption and utilization of foreign direct investment.South Korea’s foreign direct investment in China is not only beneficial to China’s GDP growth, but also China’s foreign exchange quote price, China’s import and export trade volume and foreign exchange reserves.