The Empirical Study On The Influence Of Japanese Direct Investment In China On Sino-Japan Trade

Japan is one of China’s important trade partners. Japan has also become one of China’s important FDI source. Since the 1972 diplomatic relations between China and Japan, both of Japanese direct investment in China and Sino-Japan trade has been growing rapidly. In 2013,Japan set up 943 Japanese companies in China, and the realized value of Japanese direct investment was China is $7.06 billion which was 5.7% of all FDI in China. Except the United States and Europe, China has become a major foreign investment area of Japan. With the increase of Japanese investment in China, the trade cooperation between the two countries has been strengthened. Since the 21st century, The Sino-Japan trade had expanded rapidly which had increased from $8.77 billion in 2001 to $31.24 billion in 2013the scale of Sino-Japan trade expands rapidly. Trade cooperation between China and Japan has been the important factor which can affect economic growth of the two countries. The study of the influence of Japanese direct investment in China on the Sino-Japan trade is very important.This paper will make a comprehensive analysis and study of the effect of Japanese direct investment on Sino-China trade in three perspectives including trade volume between China and Japan, Sino-Japan trade commodity structure and Sino-Japan trade area structure. Firstly, this paper introduces the existing literature on the analysis of the international investment and international trade relations. Secondly, this paper introduces the development process of Japanese direct investment in China and the Sino-Japan trade. Thirdly, by using the panel data analysis method and the time series analysis method this paper makes a further study of the relationship between Japanese direct investment and Sino-Japan trade. Finally, on the basis of empirical analysis conclusions, this paper will propose policy suggestions to attract more investment and improve the trade volume between China and Japan.This analysis found that:(1)Growth of Japanese direct investment in China can promote the expansion of trade between China and Japan.In addition, this paper found that compared with other countries the impact on Sino-Japan trade scale is lower. (2) Japanese investment in China can promote the improvement of the Sino-Japan trade commodity structure. In recent years, the primary products and capital-intensive products exported to Japan has decreased, while the labor-intensive products exported to Japan has increased; the primary products, labor-intensive products imported from Japan has increased, while capital-intensive products imported to Japan has decreased. (3) Japanese investment in China can promote the improvement of the Sino-Japan trade area structure. There are significant differences about trade with Japan in different provinces.The innovation in this paper:(1)when I studied Japanese direct investment in China influence on the trade volume between China and Japan, this paper introduced the United States, the European Union, South Korea, Hong Kong and Taiwan for panel data analysis.(2) This paper chose one kind of goods accounted for the proportion of all the goods for the variable, and used these variables for time series analysis. (3) This paper chose 8 different provinces which have most trade cooperation with Japan for panel data analysis.