Research On Effect Of Introducing Foreign Direct Investment On Chinese Service Industry

Since joining the WTO in2001, our country gradually open services markets,foreign direct investment have flocked to the service industry. Service industry hasbecome the new hot spot of foreign direct investment after manufacturing. Increasingforeign direct investment, on the one hand, brings a large number of high-qualitycapitals and advanced technology to the service industry, speeds up the development ofservice industry in our country. On the other hand, it decreases the total employment ofthe service sector, worsening the employment structure, widening the gap of serviceindustry in three regions. In such a context, this paper analysis both positive andnegative effects to study the role of the foreign direct investment services played in thedevelopment of China’s service industry. The effect analysis makes a major significanceto rationally use the foreign direct investment, improve the overall level of services.The article divided into six parts. The first part, introduction, it’s mainly describesthe background, the contents and the purpose of the article, analysis the researchsituation of scholars both at home and abroad. The second part, foreign directinvestment and services related theories it’s mainly introduced the related theory offoreign direct investment and services, lay a theoretical foundation for the analysis ofthe effect after. The third part, the development of China’s service industry and thecurrent introduce of direct foreign investment. This part analyzes the present situation ofChina’s service industry development and the introduction of foreign direct investment,through the analysis of the status quo, it is concluded the achievements of the foreigndirect investment and corresponding problems. This part laid the foundation for theanalysis of the effect after. The fourth and fifth part, qualitative analysis of the positiveeffects of FDI in services sector (capital effect, technology spillover effect) and negativeeffects’(total employment effects, employment structure effect and regional gap effect) conduction mechanism, using unit root test, cointegration analysis and causality test tostudy its impact. Summary both positive and negative effects of foreign directinvestment in services according to the extent of its impact. The sixth part, policyrecommendations, according to previous research results, put forward the correspondingdevelopment suggestions.