The Study On The Trade Effects Of Fluctuation Of Japanese Direct Investment In China

With reform and opening up, the economy and international trade of China are in great development. The increase of China’s economy is mostly influenced by three factors:consumption, investment and exports. Foreign direct investment is a significant part of investment. Japan, as an important world economy entity, plays an increasingly important role in the Chinese market. Japan and China have been trade partners for a long time, and trade between these two countries grow steadily in recent decades. However, the foreign direct investment from Japan decreased about 38.8% compared to that of last year in 2014, which is never happened in history. Based on the existing research, this paper focuses on the trade effects of fluctuation of Japanese investment in China, which is analysed from three dimensions:the volume of trade between China and Japan, the volume of main trade goods between China and Japan, and dependence on foreign trade. This paper comes to a conclusion that foreign direct investment from Japan has positive influence on the exports while it has negative influence on the imports of China from Japan. The foreign direct investment from Japan stimulates the optimization of both China’s export and import structure. Besides, the dependence of Japan on trade with China affects the direct investment from Japan. Correspondingly, three advises are given in the end of this paper, which are optimizing the trade policy in regards of foreign direct investment, emphasising on the quality of the direct investment from Japan and improving the capability of independent innovation in use of direct investment from Japan.