Research On The Export-pull Effect Of China's OFDI

At present,China's outward foreign direct investment has been developing rapidly.Under the impetus of "Going out" strategy and "One Belt,One Road" strategy,China's OFDI has achieved a continuous growth for 14 years,whose average annual increase is up to 34.4%.It's reported that China has become a net exporter of capital,and ranks as the world's second largest country in OFDI.However,on the other hand,after the rapid growth for decades,China's export has showed a weakening trend.It even declined for two consecutive years in 2015 and 2016,whose decline was 1.8%and 2%.With the revival of trade protectionism and the changes of international political situation,China's export is in a quite difficult position.Then if the outflow of lots of capital used in ODI is the main reason of the export's decline?While there are a large number of studies show that the relationship between China's OFDI and trade is complementary,which is also proved in the period when both ODI and export was in rapid increase.So how to explain the decline of the export but the increase of ODI seems to a question that is worth study.Based on the observation of China's direct investment in the North American Free Trade Area and Africa,the export-pull effects are obviously different in effective time.So in this study the export-pull effects of OFDI is divided into immediate effects and long-term effects,which researched through theoretical analysis and empirical analysis.First in the part of the theoretical analysis,immediate effects are concluded as market-widen effect and cost-reducing effect;and the long-term effects are summarized as friction-avoiding effect,reverse technology spillover effect and information-sharing effect.And the mechanism and typical cases of each effect to different economies' export are individually detailed.In another part of empirical analysis,selecting data from 2006 to 2015,including China's export,investment flows and investment stock to both NAFTA and Africa,work as two panels.Among the three variables,investment flows and investment stock are selected as explanatory variables and exports are selected as explained variables,using which into the gravity model.Then based on the results,it can be proved how China's OFDI pulls export to NAFTA and Africa.Through the comparison between the results of the two regressions,there comes to the conclusion that both immediate effects and long-term effects are showed in the investment to Africa,but only long-term effects are showed in the investment to NAFTA.Meanwhile the export-pull effects of China's OFDI to Africa is better than that to NAFTA.Besides,the reasons of China's export going down in the past two years are not only because of the trade protectionism,the downturn of the global economy and the rise of domestic producing cost,but also because the long-term effects of OFDI haven't showed up.And OFDI doesn't have substitution effects on exports.Finally,combined with China's current economic development situation and domestic problems,suggestions on China's OFDI are put forward.Especially with the "One Belt,One Road" strategy and the "Structural Adjustmen" plan,suggestions on how to promote export and industrial upgrading through investing outward have been discussed.