The Study On The Impact Of Rmb Exchange Rate Changes On China’s Outward Direct Investment

Under the background of economic globalization, the cooperation between the countries and regions is increasingly closer, outward direct investment(ODI) is the inevitable choice of a country’s economic development. China’s ODI began in 1979 with a rather late start but dramatically fast development, in 2013, China’s ODI flows reaches USD 107.84 billion and its stock reaches USD 660.48, which ranks 3rdand 11 thplace respectively according to global countries(regions). Regarding exchange-rate reform in 1994 as a starting point, close relationship is found between RMB exchange rate and China’s ODI. Consequently, studying the influence of RMB exchange rate changes on China’s ODI has practical significance upon promoting China’s ODI and achieving sustainable economic development.The paper regards the impact that RMB exchange rate changes brings to China’s ODI as main line, exchange rate changes affects ODI through exchange rate level and fluctuation.First of all, the paper reviews relevant documents upon the influence that exchange rate level and fluctuation bring to ODI, and explains its theoretical basis. Second, the paper introduces the development history of RMB exchange rate and ODI, analyzes main characteristics of China’s ODI from three aspects of overall size, industry distribution and regional distribution,and gives qualitative description upon correlation between exchange rate level and ODI. Then,build VAR model to carry out empirical analysis around the country, analyzing the impact that exchange rate changes brings to ODI in the long term and short term separately. Then, analyze the influence of RMB exchange rate reform in 2005 on ODI using OLS method. Later, carry out deep analysis from the industry level with fixed-effects variable-coefficient model,analyze effects that exchange rate changes brings to ODI in three industries and different industries, and run a comparative analysis.Through theory and empirical research, the paper obtains the following results: First,China’s ODI scale is expanding gradually, however, the gap with developed countries still exists; investment is distributed in various industries, the third industry has grown to the leading industry of China’s ODI; considering regional distribution, developing countries and regions are taken as principal things, in developed countries and regions, China’s investment ratio is really small. Second, generally speaking, from long-term point of view, the appreciation of RMB promotes ODI, huge increase in fluctuation range of RMB exchange rate will restrain ODI; from short-term point of view, exchange fluctuation will have negative effect on ODI while exchange rate level has no apparent influence on ODI; RMB exchange rate reform in 2005 promotes ODI. Third, based on different industries, the appreciation of RMB will promote ODI of the three industries, influence degree increases successively in turns of first industry, second industry and third industry. Considering detailed industry,exchange rate level brings different influence to different industries: All sectors in the third industry are greatly affected; sectors in the second industry experience huge differences in influence degree; the first industry is affected by exchange rate by least degree. Impact of RMB exchange rate fluctuations on foreign direct investment is not significant in most sectors,except for manufacturing industry, residential services, repairing and other services that ODIhas accurate inhibiting function. Finally, according to the above conclusions, the paper put forward the corresponding countermeasures and suggestions.