The Influence Of Host Countries' FTA On OFDI's Location Choice Of China

Since 1990s,the construction of foreign direct investment and free trade area has has attracted more and more attention from domestic and foreign scholars.With the rapid development of China's economy,China has become the largest country in attracting foreign investment,but we should not only "bring in",but also "go out","go out" strategy has risen to the national strategic level.Since 2000,the state formally proposed "go out" strategy,China's foreign direct investment has developed rapidly.According to China's Ministry of Commerce statistics,as of the end of 2015,China's total OFDI(traffic)was $145 billion 670 million,an increase of 18.3%.In this context,domestic and foreign scholars focus on research of China OFDI.In the case of foreign direct investment,the location choice of OFDI is the first problem to be considered.Location selection is the process of investing home country to find a specific regional location to achieve the desired investment target,which is affected by the host country's location factors.How to find the best investment areas,which factors affect the choice of the host country's external direct location,are worthy of in-depth discussion.Whether from theory or empirical research,investment and trade have the fact that replaces each other.With the continuous development of the free trade area,China is also actively promoting the free trade area negotiations,the number of free trade zones has been signed and entered into 12.But through the study of foreign direct investment in China top twenty countries(regions)that eliminate China Hong Kong,British Virgin Islands and the Cayman Islands three tax havens,among the country China made foreign direct investment,there are 13 countries that have not signed the FTA with China,and the number of these countries signed with other countries there is very large.Therefore,the author wants to explore the impact of the host country's FTA on China's OFDI through theoretical and empirical research.In this paper,the author made the theoretical mechanism of the analysis,when our country is in the external FTA,the impact of the host country's FTA on China's OFDI,mainly analyzing from static and dynamic mechanism.First,the static mechanism is more complex,FTA will create investment and investment transfer effect on OFDI.First we should clarify Different types and motivations of China's foreign direct investment,and then analyze of effects of FTA signed by host countries on foreign direct investment of Chinese enterprises.And this paper from the perspective of outside the region,that is to say,to those countries who have not yet signed FTA with China,the more FTAs host country signed,the more OFDI China will made.When our country is in the outside ofFTA,in case of avoiding the barriers of foreign trade,tax and internalization,our country's OFDI will increase.That is to say,when our country is outside the FTA,the number of FTA signed by the host country is more,the more OFDI to the host country from our country.Second,the dynamic impact of FTA on China's foreign direct investment mainly includes four aspects:scale economy,economic growth effect and technology diffusion effect.When our country is in the external FTA,the dynamic effect of the free trade area of the long-term will have positive impact on China's foreign direct investment,that is to say,when our country is in the external of FTA,the number of FTAs have a positive influence of China's overseas direct investment.This paper uses the gravity model,and the countries who has not signed the FTA with China is divided into developed and developing countries,using 2003?2015 panel data to analyze the influence of FTA on China's signing of the host country on OFDI.The result shows that both the overall sample or developed countries or developing countries,when China is in FTA outside,the more the number of host country signed FTA,within FTA of the host countries establish trade barriers and tax barriers,but also because of the presence of economies of scale,the signing of FTA will expanded FTA internal market.Based on the motives of tax avoidance and internalization,China will increase OFDI to these countries.According to the analysis results,this paper puts forward corresponding policy recommendations.