Research On The Development Stage And Trade Effect Of China’s Two-way Investment

International trade,IFDI,OFDI,as essential ways of world integration,China has made great achievements in these fields since its adoption of reforming and openning up policy. In the present,China ranks the first place in international trade area,and third in foreign direct investment both inflow and outflow. ALL these four aspects are engines of China’s economic development,and affect each other.Nowaydays,a new trend is emerging in China’s two-way investment,that is OFDI growing at a significantly faster rate than IFDI.In this situation,it is of most importance to China’s economic development to conduct a research in figuring out the developing phase and trading effects of the two-way investment.This article will make use of tqualitative analysis with quantitave analysis,around two themes:one is identify the phase of two-way investment,the other is its trade effects, to conduct its research. The two parts have inner connections but relatively independent research methods.The later is based in the theory that FDI has international trade effets,the necessity of the reserch is that FDI is undergoing some changes,considering the logical and economical connections of FDI and international trade,the new situation and features of two-way investment must affect its long-term trade effects.To figure out the alteration and its effects is the goal of this article.On the research of the development stage of Chinese two-way investment, this paper first made a analysis of the current situation in the second chapter, introduced respectively the scale, industry distribution and regional distribution of IFDI and OFDI with a lot use of charts, data in descriptive methods; the chapter three, with the Denning international direct investment development cycle theory as the basis and the previous research method as the reference, using the time series data of net foreign direct investment and per capita GDP during 1982-2013 as samples, to establish two times polynomial model and four times polynomia module to fit the investment cycle and the level of economic development to find out the mutual relationship between them, through the analytical equations of the model came the conclusion that China was at the transition period of the third stage to the fourth stage in foreign direct investment and this transition accured at a critical point of China’s per capita GDP reached $7024.As the conclusion on trade effect of two-way investment is that:in the long-run, OFDI promotes foreign trade.among them, the elasticity of import trade is 0.1039, and of 0.2013 for export;IFDI had a subtle substitution effect to import trade with a elasticity of -0.001,it gained a promoting effect on export trade, the elasticity is 0.1440. From the view of a dynamic impact process, OFDI had a persistent but convergent promoting effect on export, its effect on import trade was somehow hysteresis and the initial effect was negative,then turns to persistent and significant postive effects after three stage to continue. The overall impact of IFDI on exports was positive and it would gradually enhanced in the ten period lag,except a tiny negative effect at lag two period; the overall presentation of IFDI on the import trade was a substitution effect, later,it showed a smaller role in promoting. In general, the results of the impulse response indicated that the dynamic impact effect and long-term relationship between two-way investment and international trade is consistent, and also this paper quantified the trade effect of two-way investment.