Impact Of Foreign Direct Investment On China’s Wages

Since the1990s,with the acceleration of the global economic integration and the strengthen flows of the international capital, Foreign Direct Investment has become an important driving force for China’s economic growth, then China’s average wage has increased, the wage gap is also widening, it was shown in the following two aspects:one is that from1995to2011, China’s total Foreign Direct Investment projects is516,100, The actual use of Foreign Direct Investment is$1,067,045,000,000, with the development of economic, The amount of Foreign Direct Investment in China is still increasing and the level of opening up is also improving. From2000to2011China’s utilization of Foreign Direct Investment shows an increasing trend. Another is that from1995to2011, China’s average wage has increased from5500Yuan to29,362Yuan,the growth is large. With the development of economic, China’s average wage level is still on the rise, especially since the Reform and opening up,the introduction of Foreign Direct Investment has enhanced the level of the average wage. Whether these two aspects can indicate Foreign Direct Investment has some impact on China’s wage levels, it need to be studied. To study the problems is meaningful for introducing Foreign Direct Investment and improving the wages.This article selected the data of China’s Foreign Direct Investments and wage levels and labor productivity on total number and some industries and all regions from1995to2011to research the effects of Foreign Direct Investment on China wages. First, we use the time-series data to analyze the impact of Foreign Direct Investment to wages. Then we use the panel data by industry, sub-regional to analyze the role of Foreign Direct Investment on wages, finally, we propose some advice on how to introduce Foreign Direct Investment and improve our wages according to the empirical results.According to the above ideas, this paper introduced the background and significance of the research, described the methods, reviewed the current situation of this problem in domestic and foreign, conducted a statistical analysis on Foreign Direct Investment and wages, researched the impact of Foreign Direct Investment to wages in total, sub-sectors, sub-regional areas. Through these studies, the main conclusions are as follows:The overall level of China’s Foreign Direct Investment is growing trend, but the rate is volatile, China’s average wage showed an increasing overall trend; Foreign Direct Investment in China’s average wage level has a positive effect, however, this effect is not as good as the promotion effect of wage labor productivity; during the analysis of industry, we found that only in the manufacturing Foreign Direct Investment has a certain effect on wages; we also found that the enhancing effect of Foreign Direct Investment in east and central is significantly than west region. Finally, this paper gave some suggestions on industry level and regional level according to China’s use of Foreign Direct Investment conditions and wage levels.