The Effect Of Fdi In Services On Chinese Service Competitiveness-

Since the mid-20 th century, the center of the global economy has been translated from the industrial to service, which is mainly showed that the proportion of the service sector in GDP and employment of the whole society has rose. Developed service sector is not only the important security of improving the people’s living standards and quality, but also plays an increasingly important role in promoting the flow of commodity resources, gathering high production elements, upgrading of industrial structure, and enhancing the competitiveness of a country. Enhancing the competitiveness of the service sector has become a strategic core mission of the country’s participation in the global competition. The paper is focused on how to take advantage of foreign direct investment in the service sector for enhancing the competitiveness of the Chinese service industry.At present, the domestic scholars has studied the mechanism of the manufacturing’s competitiveness based on the effect of the FDI spillover, but there is still a lack of domestic research about the impact of foreign direct investment in service to China’s competitiveness of the service industry, especially for empirical test. This paper attempts to use the methods of between theoretical and empirical analysis, which purpose is to examine the impact of the impact of foreign direct investment in service to China’s competitiveness of the service industry, and make some reasonable suggestions to attract foreign direct investment and improving the efficiency of utilization in FDI,.The theoretical analysis mainly describes the affecting channels and factors of FDI in services on the competitiveness of the services sector, and proposes three hypotheses based on China’s macroeconomic. The empirical part builds the regression model and use stata12.0 to run System-GMM estimation. There are some conclusions draw in this paper:First, FDI in Services has a positive impact on improving the competitiveness in Services, and There is the regional differences in this impact from the different regions, which the impact of Eastern region is higher than the nation average, the middle and western regions.Secondly, human capital, the institutional environment and the Services’ infrastructure is the three main factors of affecting the FDI’ spillover. The results of regional regressions shows that in eastern region, the higher human capital and the more perfect the infrastructure is, the more efficient the positive Technology spillover becomes. The lagging and imperfect market in the western has slowed down the pace of digesting and absorbing the advanced technology and management skills from the foreign enterprises.Third, the proportion of the Real Estate sector’s FDI in 2011 is 48%, but the increasing impact of the real estate’s FDI to the competitiveness of the service is indistinctive. The impact of the other Services’ FDI, besides the real estate, for improving the competitiveness of the service sector will be higher, which indicating a lower efficiency of using foreign direct investment in real estate, and even the negative technology spillover effect. Government should slow the flow of FDI into the real estate, guide foreign capital flows to the productive services which is the more efficient in using FDI.