Impacts Of China’s Foreign Direct Investment On Domestic Industry Upgrade

In the implementation of "bringing in" and "going out" strategy, China which is the largest developing country, has achieved constant development in the context of foreign economy.Outward Foreign Direct Investment in Chinese foreign trade development has become an important part.Meanwhile, Chinese domestic economy is at a critical stage of restructuring and upgrading of industry.It is necessary to transform the development mode and adjust the industrial structure,which has become the key elements for a long period of economic and social development.This paper reviews the related concepts of the industrial upgrading, Outward Foreign Direct Investment and related classical theory.By reading a large number of domestic and Outward Foreign Direct Investment on the relationship between literature and industrial upgrading, this paper query large amounts of data on the Chinese Outward Foreign Direct Investment and industrial upgrading.on this basis,r according to Chinese conditions, this paper analysis the mechanism of meeting the needs of our country. Then references and modified Chenery "standard structure" model, using the ADF test, cointegration test, Granger causality test, impulse response function test, econometric methods variance decomposition method, empirical tests of the foreign direct investment on the existence of the impact of Chinese industrial upgrading and getting a positive result.Then, this paper analyze and discusse the factor which can contribute to a positive effect on industrial upgrading of Foreign Direct Investment.Finally it came to the conclusion and appropriate policy recommendations.