Study On The Impact Of FDI On The Current Account

Since 1990 s, with the rapid development of economy in China, more and more international capital has been flowing into our country, FDI has become the main form of international capital inflows. And the large inflow of foreign direct investment has an important influence on the stability of our country's current projects. FDI through technology transfer, capital formation and promotion of effective competition and other ways to increase China's net exports, the formation of current account surplus; at the same time, through the payment of royalties, royalties, profits and other ways to form a service and revenue project deficit, the negative impact on current projects. FDI of a large number of inflows, so that China and the rest of the world capital increasingly close, but this will also bring a certain risk, capital flows will be affected by exchange rate fluctuations, for foreign investment enterprises and our country's import and export business, the face of uncertainty is greater, directly affect the exchange rate of its trade income and profits. And in 2009, China's implementation of cross-border RMB settlement policy, greatly promoting China's foreign trade, convenient and international monetary settlement, reduce exchange rate risk, reduce the trade income and foreign direct investment enterprises, foreign direct investment in the use of foreign direct investment enterprises, royalties, labor costs and other expenses and income return of uncertainty. This paper studies the effect of FDI on the current account through the perspective of cross-border RMB settlement, observing the role of the state to promote the RMB to the world on the FDI and the regular project.First of all, this paper reviews the domestic and foreign scholars on the FDI, current projects and cross-border RMB settlement and other related literature review, domestic and foreign scholars believe that FDI is mainly through the trade effects, technology spillover effect, the profit remit back to the sub project of the current project, the first two will lead to the current account surplus, and the profit will be generated by the project's current account deficit. The cross-border RMB settlement through a unified settlement currency, reduce exchange rate risks, to ensure that the import and export business and foreign investment income. Then this paper expounds the influence of foreign direct investment, the current situation of China's foreign direct investment, and foreign direct investment on the project, and the relationship between the two. The empirical results show that FDI has a positive effect on the goods trade and employee compensation. As a result, the FDI is mainly influenced by the impact of the trade balance of payments and the initial income, and it has a greater relevance to the comprehensive effect. Finally, empirical test of the impact of cross-border RMB settlement, FDI on the current project, this paper examines the impact of foreign direct investment, consumer level, commodity retail price index, fixed asset investment, fixed asset investment and foreign direct investment, GMM regression and 1993-2013 regression analysis. The impact of cross-border RMB settlement, foreign direct investment on the current account of the project. The empirical results show that the large cross-border RMB settlement area, such as Guangdong, Shanghai, Zhejiang, Beijing and other regions, in 2008 after the financial crisis, the export volume is affected, the growth rate is the fastest, and in 2010 after showing a strong growth momentum. According to the test result of the GMM and two-way fixed effects and cross-border RMB settlement of the current often project influence coefficient is 0.0589. Coefficient of foreign direct investment in the current period as 0.00276; in 1993 as the base period, with the passage of time, foreign direct investment to import and export volume is increased first and then decreased, an inverted U-shaped distribution lag 16 years as a result of more significant; to the number of foreign-invested enterprises instead of foreign direct investment amount, by the robustness checks, the results are stable. Its policy implications are: through the adjustment of FDI or some of the domestic macroeconomic variables can be used to adjust the current account of the project.By promoting cross-border RMB settlement can expand import and export trade, improve trade conditions, and then increase the current account surplus, this paper puts forward the following policy recommendations: first, the appropriate introduction of foreign investment, a reasonable adjustment of foreign investment policy; second, to encourage enterprises to go out, to carry out more cross-border RMB investment and financing activities; finally, strengthen regional cooperation, radiation driven development of cross-border trade in the surrounding region.