Reseach On The Influence Of FDI Inflows To China’s Automobile Industry Export Competitiveness

Automobile industry, known as "the industry of industry", is a pillar industry of the national economy. Since the 1980s, after 30 years of joint venture and cooperation, the continuously increasing scale of FDI plays a positive role in China’s automotive industry’s development. According to preliminary statistics of the Ministry of Commerce, the actual use of FDI in 2013 totally amounted to 21.073 billion dollars in which the automotive industry contributes 5.847 billion. China’s auto production and sales amounted to 23.7 million and 23.5 million respectively in 2014 with an increase of 6.9% over 2013 which makes China the first in the world in six consecutive years. But it is the mismatched pace of China’s export of auto and the serious imbalance between the industrial export competitiveness, which is far behind the powerful countries of automobile, and production scale that is under the glamorous data. So, at present, the essence of China’s automotive industry is "large but not strong".This paper first reviews the previous studies on the relationship between FDI and the competitiveness of the export of automobile, then analyzes the impact mechanism of FDI inflows to the competitiveness of China’s export of automobile and describes the current situation, characteristics and related problems of China’s export of automobile, and the impact of FDI on the automobile industry. Finally in this paper, the automotive industry related data from 1995 to 2012 is studied based on this theory to empirically analyze the relation between the actual used amount of FDI in automotive industry and the competitiveness of the export of automobile. It is showed that there is a long-run equilibrium relationship between the competitiveness of the export of automobile and the actual used amount of FDI in automotive industry, technical level and trade openness. In the long term, the automotive industry FDI inflows have greater positive impacts on the competitiveness of the export of automobile than its negative ones, which means a promotion effect. But in the short term, automotive industry FDI inflows’impacts on the competitiveness of the export of automobile are not that significant. On the other hand, the promotion of the competitiveness of the export of automobile may in turn attract more FDI inflows because FDI’s impacts on the competitiveness of the export are mostly indirect. Finally, policy recommendations on how to enhance the competitiveness of the export of automobile are proposed according to the theory and empirical results to make FDI inflows play a better role.