Analysis On Factors Influencing Sino-American Bilateral Investment

Since China has reformed and opened up, it brought foreign investment boom and provided new vitality for growth. The United States is the main source of foreign investment, according to statistics from China’s ministry of commerce showed that by the United States’investment projects in China is 40588 by 2013, the cumulative investment companies is 63111, the actual investment is $43.25 billion, most of the world top 500 enterprises have established a branch in China, even some of them have been moving from coastal areas to the Midwest. Although during 2003-2014, the United States’ investment flows in China showed downward trend, but the direct investment in China still has the pivotal status. With the rapid development of China’s economy, China is also gradually carrying out of the direct investment to the United States. In 2008 because of the financial crisis, many developed countries around the world have also been impacted by the financial crisis, the global economic downturn and slow growth. So many developed countries, especially the United States, hope to stimulate its own economy through encouraging foreign investment. Under the opportunity, China’s direct investment in the United States showed a trend of rapid growth, from less than $50 million in 1992 to$ 5.2 billion in 2014. The United States as the world’s largest developed country, has the best science, technology and management, China’s increasing investment to the United States is good for its overseas business and international strategy for the future development for a long time. In addition, our country is in a critical period of economic transformation, absorption direct investment and direct investment to the United States can not only improve the level of science and technology innovation in our country, but also can promote the upgrading of industrial structure in China. On this basis, studying the influencing factors of the two-way direct investment is meaningful for economic development in China and the United States, and for the foreign direct investment policy and bilateral investment treaty negotiations it also has strategic significance.Based on this background, the first part is a brief introduction of Sino-American investment development from 1992-2014. The background and significance of the topic are showed in this part, and summary the relevant literature of Sino-American direct investment from domestic and foreign researchers. Then points out the innovations and shortcomings of the article, established the basic idea of the article as a whole. The second part introduces the theory of foreign direct investment, including investment theories of developed countries and developing countries, to lay the theoretical foundation for the empirical study later in this article. The third section is the development and current situation of Sino-American two-way direct investment from 1992 to 2014, including the status of US direct investment in China and the status of China’s direct investment in the United States. The fourth part is the empirical part of this article, by establishing a time series model, select the host country market size, investment in the stock of the host country, China-US trade, the difference interest rate between the two countries and labor costs as explanatory variables. Use variable stationary test, cointegration test and Granger causality test, and then create multiple linear regression model, the final empirical results show:Sino-American trade has a big influence for Chinese investment on the United States, but smaller for the US Investment on China; American market size has a negative correlation for the investment from China to American. But the Chinese market has a positive correlation for the investment from American to China; For Sino-American labor cost difference for Chinese direct investment in the United States there is no significant relationship. The fifth draw conclusions based on empirical results and found some problems existing in Sino-American two-way investment:lack of political trust between China and the US; the lack of standardization of bilateral investment agreements between China and the US; there is a huge gap for Chinese workforce levels and labor productivity compared with the United States. The policy recommendations including:the two countries should build political mutual trust mechanism; to accelerate and promote bilateral investment agreement negotiations; China should strengthen the R & D expenditure intensity; China should accelerate talent strategy; Chinese enterprises to the extent possible adapt to the US market environment and business practices.Through comprehensive comparative analysis of empirical research on direct two-way investment between the two countries, this article is innovative. At present, domestic and foreign scholars focused on the influence factors of foreign direct investment in China or the United States, or FDI impact on the home country or the host country, while ignoring the influence of some factors on both China and the United States respectively, and the impact of foreign investment in China.