The Research Of The Mutual Effect Between China’s Foreign Direct Investment And Foreign Trade

With the fast development of China’s economy in the recent years and global economic integration, the "Go Out" pace of China’s corporations is accelerating. From foreign trade to foreign direct investment, the degree of China’s integration into international division of labor is deepening ceaselessly. As the most important ways for a country to participate in global economic activities, foreign direct investment and foreign trade have occupied irreplaceable position in China’s economy development after reform and opening up. Both have showed increasingly growing trend in the number after 1978. The mutual effect between both has become a good research point. The writer uses theoretical analysis and econometric model compressively to research the mutual effect between foreign direct investment and foreign trade and their quantitative relationship. After large amount of analyses, this paper reaches the conclusions that:China’s foreign direct investment has both positive and negative effects on export trade and import trade depending on the different motives of foreign direct investment. China’s foreign direct investments in most countries promote the development of China’s foreign trade with these countries. And china’s export trade promotes the development of foreign direct trade through the reversed effect of trade barriers and the accumulatived effect of foreign exchang reserves. Finally, the writer comes up with some policy proposals in the foundation of these analyses which will have important theoretical and practical significance in the stable, healthy and sustained development of China’s foreign direct investment and foreign trade.