Research About The Impact Of Foreign Direct Investment On China’s Bilateral Trade

As a result of the economic reforming and globalization started from 1980s in China, the economic reality and statistics data of our country in decades show that foreign capital has an indispensable impact on the international trade of our country. Along with the ultrafast prosperity of China’s international trade and the productivity of foreign capital, the impact on international trade due to FDI has always been the hot topic in academic circles. Nevertheless, a majority of the researches only aim to indicate the overall relationship between FDI and trade volume, while those concerning the differences across countries are quite rare. The article designs to solve one ultimate problem:whether FDI from different sources act as a substitute or complement for bilateral trade, and besides the trade potential between countries will be statically and furthermore, dynamically evaluated.Using gravity model, article collects the data of China’s 13 major investment country of origin from 2001 to 2012, applying the method of panel data model, carry out the empirical analysis on the relationship within foreign direct investment and international trade. In general, foreign direct investment could promote the growth of bilateral trade; however, the influence of various countries could be different or even opposite. In this article, the FDI stock of Hong Kong, Japan, South Korea etc. act out to be simulative, while the FDI stock of Singapore, the Netherlands etc. is substitutive. Certain numbers of nations are "Trade Excessive" statically, but "Trade Deficit" dynamically. Thus puts forward that the FDI our country attracted should focus more on quality rather than just quantity; China should establish policy according to the classification method about trade partner country above so that the policy can be customized.