Analysis Of The Impact Of China's Foreign Direct Investment On RMB Internationalization

The implementation of the “One Belt,One Road” strategy has provided an opportunity for China's outward foreign direct investment to further promote the internationalization of the RMB in China.Facing the current change in the new form of globalization,global economic cooperation has gradually shifted from tradeoriented to investment-oriented,and the development of outward foreign direct investment ushered in an unprecedented period of strategic opportunities.This article conducts research on this background.The introduction of the article mainly introduces the research ideas,methods,innovations and deficiencies.This article adopts a combination of theoretical and empirical methods,literature review and theoretical basis analysis of the topic related to the current status of the research and possible deficiencies,as well as the relevant theoretical basis for this study.Then it introduced the status quo of the development of foreign direct investment and internationalization of the RMB,and had a comparatively comprehensive under-standing of the current development level of the two.The fourth chapter summarizes and analyzes the impact of foreign direct investment on the internationalization of RMB.On the one hand,the occurrence of outward foreign direct investment can increase the overseas stock of RMB to lay the foundation for RMB internation-alization;on the other hand,outward foreign direct investment can trigger the substitution effect of currency trading.The multiplier effect of currency exchange,the effect of currency settlement,and the agglomeration effect of currency settlement directly affect the internationalization of the RMB.It can also indirectly affect the internationalization of the RMB by increasing China's foreign trade scale and improving China's foreign trade structure.In addition,outward foreign direct investment can also indirectly affect the internationalization of the RMB by promoting the international development of financial markets and improving the international division of labor status(trade status)of a country.In the empirical analysis,when studying the impact of foreign direct investment on the internationalization of the RMB,the foreign direct investment index is used as an independent variable,the RMB internationalization index is used as the dependent variable,and other influencing factors are used as control variables.Control variables include CPI,exchange rate indicators,trade imports,trade exports,and financial market development indicators.Through the unit root test,cointegration test,vector error correction model,and Granger causality test,the long-term equilibrium and short-term fluctuations of the impact of foreign direct investment on the internationalization of the RMB are finally obtained.The results show that foreign direct investment has a positive effect on the internationalization of the RMB both in the short-term and in the long-term.Finally,it makes possible suggestions on foreign direct investment and the internationalization of the RMB in terms of policies,laws,and institutional reforms.This includes further deepening the reform of the financial system,increasing support and protection of foreign investment companies,and seizing the strategic opportunities of the “One Belt and One Road” initiative to actively promote overseas direct investment to promote the regional and international of RMB.