The Relationship Between FDI And Foreign Trade In China

Since China's reform and opening up,China's economic development has had the unprecedented change,especially in the field of international trade and international investment.The amount of foreign direct investment in China in 1985 was $1,956 billion,after rapid development the foreign direct investment reached $1262 at now.In 2003,the Chinese FDI is bigger than the US for the first time,become the largest host country.On the other hand,import and export trade of our country have also gone in rapid growth and total import and export in 1979 from $29.3 billion to $3.953 trillion in 2015.However,China's foreign direct investment and foreign trade show a state of unbalanced regional development.In 2015 the eastern region accounted for 63.38%of foreign direct investment,central region accounted for 26.81%and western region accounted for 9.80%.In 2015 the eastern region accounted for 85.22%of foreign trade,central region accounted for 7.82%and western region accounted for 7.36%.Until 1957,the Mundell who first proposed alternative model of international trade and investment,then Japanese economist Kojima use the United States and Japan the two different ways of FDI as the research object,and puts forward the substitution effect between investment and trade.According to the Chinese FDI and foreign trade of substantial growth at the same time and regional imbalance,this paper will verify the FDI and foreign trade is an alternative or complementary relationship between relations,and on this basis,to study the characteristics of Chinese opening.There is a huge gap between China's economic development area,so in each area to clear up its relationship between FDI and the import and export trade is particularly important.So in this paper,according to the conventional division standard Chinese 29 provinces and municipalities is divided into eastern,central and western three areas,and selects the economic data from 1992 to 2015,and make the economic data into panel data,then do the Hausman test respectively to determine the regression model is fixed effects model or random effects model.According to the different model we do regression.From the regression results:first,in terms of the relationship with foreign trade,FDI whether in the whole or in the east,the middle and the west,FDI has promotion effect to export trade.Second,on the relationship with import,FDI is the promotion effect to the import trade as a whole.FDI promotes imports in the eastern and central regions and FDI replace imports in the western region.The innovation of this paper lies in:1,three regions respectively to study the relation between foreign direct investment and foreign trade;2,in the empirical research we joined the lag phase of FDI and foreign trade,in order to get more accurate to the conclusion.According to the conclusion,we can give some policy suggestions:first,at present our country's FDI has reached more than $1 thousand,which is at a very high level.According to the eastern,central and western each situation we should take the way of establishing a FDA with different countries;Second,speed up the industrial upgrading footsteps in eastern region,the industrial chain can transfer from the east to the central west.Third,promote the reform of import and export trade policy,remove obstacles to development of import and export trade.