The Research Of The Trade Effect Of China’s Two-way Foreign Direct Investment

According to UNCTAD (United Nations conference on trade and development)published by the world investment report (1996) statement, there was inseparablerelationship between direct investment and trade. Clarifing the links between them,which is beneficial to evaluation from the perspective of trade effects the efficiency ofthe current investment strategy,is good for investment strategy shift to provide somereference for the next step.Different from usual researches that only regarded a country as a host or homecountry of foreign direct investment,this article takes the both identification that acoutry both has into consideration,and this change make it easier to recgnize thedirection and size of the trade effect of foreign direct investment.Articles fromtheoretical and empirical studies two aspects of two-way direct investment on China’strade effects research. In theory, from the dual perspective of host and home countries,the transmission mechanism of direct investment and trade combing effect, andanalyze the impact of direct investment were different motivations on imports andexports. In empirical terms, selected China from1982to2012, imports and exports,foreign direct investment, foreign direct investment per capita GDP of RMB againstthe U.S. dollar and dependence on foreign trade data, through the establishment of avector autoregression model (VAR model) and error correction model (VEC model),by Jonathan cointegration cointegration relationship between variables get discoveredconclusion is: IFDI creation effect in the short-term export performance, export andimport substitution effects creation effect, creating the long-term performance forexport and import substitution effects; OFDI in the short-term performance of theexport import substitution and substitution effects in the long-term performance andcreate effects for export and import substitution; trade effect is greater than the tradeeffects stage IFDI OFDI, the performance of IFDI effect coefficient greater than theabsolute value of the coefficient OFDI absolute value.The result shows that, At this stage, the role of foreign direct investment isgreater than the effect of trade on foreign direct investment on trade, but it alsoillustrates that China’s foreign direct investment there is great potential fordevelopment, the promotion of the role of trade also need to dig. Thus, in the currentsituation, from improving trade, increase the angle of sustainable economicdevelopment momentum, the next step should be in direct investment strategy to ensure IFDI steady growth based on foreign industries and regions to guide the flowof foreign capital to upgrade and improve structure, strive to improve the quality anduse resources efficiently to attract investment; while continuing to promote OFDIdevelopment, stimulate private OFDI potential to guide investment flows, theformation of OFDI return as soon as possible.