A Study On The Effect Of China's Outward Foreign Direct Investment On Import And Export

Based on the perspective of home country of foreign direct investment,in the literature review section,this paper firstly reviews the theories of OFDI/trade relationship,and then the latest empirical researches on the same topic,and finally examines the mechanism of outward foreign investment on export and import;in the current situation analysis section,this paper uses dozens of graphs to illustrate China's OFDI-trade relationship in terms of regional distribution and industrial distribution;last but not least,the paper makes an empirical analysis by using multinational panel data from 2003 to 2017 of 143 hosting countries.The results show that export creation effect of China's outward foreign direct investment remarkably exists,and on average 1 percentage of China's OFDI increases exports by 0.02% when all other factors remain equal.However,this paper cannot find strong creation effect of China's OFDI on import.On general,the export creation effect is much clearer than reverse import effect.Besides,there are obvious heterogeneities in trade creation effects of OFDI.When the export volume is relatively low,it has a greater creation effect on export trade;but when the trade volume is relatively high,exportinduced effects are limited.On the other hand,the creation effect of OFDI on import gradually reinforces as the import volume increases.Finally,this paper examines the country effect of OFDI on trade,and finds significant differences in effects of outward foreign direct investment on import and export between different nations by regressing developed countries sample and developing countries one.To be specific,China's OFDI has positive relationship on export to developing countries and 1% increase in China's OFDI to developing countries could lead to 0.04% rise in export trade when all other factors stay constant;but this paper cannot find obvious relationship in developed countries sample.