The Study On The Influence Of South Korea’s Direct Investment In China On Bilateral Trade

Along with China and South Korea bilateral trade agreements signed, China has completed the FTA negotiation whose trade is the largest and field is the most comprehensive. In the 5 years after Free Trade Agreement becomes effective, South Korea’s GDP is expected to increase the maximum of 1.25%, China’s GDP will also enhance the 0.4-0.6%, China and South Korea have deepened the trading partnership,South Korea occupies a pivotal position in China’s foreign economic relationships. Up to 2014,the bilateral volume of trade between China and South Korea reached $290.4 billion and the direct investment in China amounted to $3.13 billion. In this paper, The influence of South Korea’s direct investment in China on bilateral trade will have a certain guiding significance for the further development of China economic and trade relationships.In the literature review stage, the theory about traditional western international direct investment and trade was sorted up first. And then, the alternative, complementary and uncertain relationship between investment and trade was defined, the domestic literature on the influence of investment and bilateral trade were collected. At last, the research directions of the related topics are sorted out. In the data analysis phase, through collecting and sorting out the data of direct investment, bilateral trade volume and trade structure between China and South Korea, analyzed the development stage and the changing trend. Using GDP and exchange rate variables by Eviews, analyzed the impact mechanism of South Korea’s direct investment in China on the trade of scale and structure. In the long term, South Korea’s direct investment in China has a profound impact on China’s import and export trade volume, import and export trade structure. At the result discussion stage,explained the current trade situation between China and South Korea and put forward the proposal from the macroscopic policy angle.