The Research On The Trade Effect Of China's OFDI

"The Belt and Road" Initiative provides a broader platform for China's foreign trade and economic cooperation.At present,our country economy entered into the “new normal”period so the economy is stabilizing.Affected by the overall weakness in global economy,the foreign trade growth in China is slowing.China's economy is in urgent need of transformation and upgrading to seek a new growth engine that can promote the development of foreign trade in order to face economic problems of domestic resource shortage,disappearance of the advantage of labor-intensive and serious excess manufacturing capacity.OFDI is proved to promote or replace international trade by the existing theoretical research and empirical analysis in China and foreign countries.In view of this,this paper mainly studies on the trade effect of China's OFDI to the countries along the belt and road and discusses deeply how to promote bilateral trade,prompt the transformation of industrial structure in China and drive economic prosperity of all countries through the development of foreign direct investment on the belt and road combined with theoretical research and empirical analysis.First of all,this article sorts out the study of the OFDI trade effect researched by the domestic and foreign scholars.Based on the study,it analyzes the status of China's direct investment and trade to the countries in detail mainly including the total and growth,regional distribution,sector allocation,highlighting the dissimilitude in different areas on OFDI and trade.The paper judges that the trade effect of China's direct investment in countries is creative by the intuitive comparison of investment and trade.Secondly,the author analyze conduction mechanisms how the OFDI influence the import and export,including export creation effect,the reverse effect of import,the substitution effect of export,and the import diversion effect.The paper also makes a futher hypothesis on the trade effect of China's OFDI to the countries along the belt and road,that is,there are strong export creatipon effect and the reverse effect of import.Next,this article selects the appropriate variable index and the related data of 61 countries along the belt and road from 2003 to 2015 according to the foregoing explanation of conduction mechanism and investment and trade status,establishing extended gravity models to make the empirical regression from the two aspects of import and export effects.It is concluded that China do exists trade creation effect in the countries' direct investment.At the same time,compared with the direct investment flows,the creation effect of the direct investment stock is more obvious.Moreover,investment trade effect factors ofmarket size,labor resources,the degree of trade facilitation,technical level and the legal system of the host country is positive correlation,while the infrastructure construction causes the trade effect to change in the opposite direction.What's more,China's export trade to the host country is negatively related to the natural resources endowment of the host country.Finally,based on investment and trade status between China and countries along the belt and road and the above conduction mechanisms and empirical conclusions,the paper puts forward to some measures from the macro level as well as micro level with a view to further promoting China's economic and trade cooperation with countries along the way.These countermeasures include perfecting "The Belt and Road" fiscal and tax supporting policy,promoting the reasonable layout of foreign investment,implementing differentiated investment strategy,speeding up interconnection construction of infrastructure,transforming the investment attitude of enterprises,improve their ability,strengthening the communication between enterprises and risk coping mechanisms and the like.