| Foreign direct investment (Outward Direct Investment, ODI) is not only an important way for China to participate in the process of world economic integration, but also ensure the sustainable development of China’s economy. In the21st century, China’s foreign direct investment has been rapid development, China’s foreign direct investment in2010reached$67.8billion; it was32.25times Comparison with2004! Foreign direct investment has provided a powerful driving force for Sustainable development of China’s economy, but if the rapid growth of China’s foreign direct investment is sustainable? China’s foreign direct investment is government-driven or market driven? What are the main factors that determine China’s foreign direct investment? These issues have become the focus of attention of scholars. The "new new trade theory", which representative by Melitz (2003), documents that productivity is an important factor that Influence Company’s foreign direct investment. Compared with exports and domestic production and sales, investment and production in foreign countries, must bear the fixed costs of Building foreign factories and other fixed costs. So only the companies above certain threshold productivity can get profitable form abroad investing. The end result is that enterprises which have highest productivity will select foreign direct investment; enterprises which have second high productivity will select export; enterprises which have lowest productivity only product and sales in the domestic."New New Trade Theory" analyzes the relationship between productivity and business investment decisions, but the theory’s assumption is that there are no corporate financing constraints and companies are able to obtain sufficient financial support for investment. In fact, in reality, many companies often encounter difficulties in financing, even though the productivity level is enough for enterprises to investment foreign and get profits, but if companies do not have enough money to build factories or acquisitions abroad, the Foreign direct investment cannot be achieved, therefore, enterprises should cross a threshold of financing constraint In order to investment foreign (Buch et al.,2010).Speaking of productivity development of Chinese enterprises, after the reform and opening up China’s economic has been remarkable developmental, Chinese business productivity has also been greatly improved, which laid the foundation for China’s foreign direct investment. However, although the scale of finance has made significant growth, Chinese enterprises still face the problem of financing constraints. Because China’s financial markets are not fully market-oriented, the problem of state intervention in financial markets still serious, phenomenon of financial repression in China is obvious. For example, China’s interest rates are not decided by money supply of market but by national administrative. Viewed from the perspective of the savings, the results of people deposits are almost the same no matter to which bank, because there is no price competition between banks. Viewed from the perspective of the s lending, under the administrative intervention, the bank loans have obviously state-owned enterprises bias. While state-owned enterprises can easily get a loan, but capital utilization efficiency of state-owned enterprises for is very low; On the other hand, many private SMEs having developed potential are difficult to get financial support of banks, these enterprises have very serious financing constraints. In this context, this article based on the analysis of "New New Trade Theory", based on framework Including the analysis of the financing constraint, Expound the Mechanism of productivity and Financial Development to Foreign Direct Investment; using provinces and enterprise structure data, combined with appropriate econometric model to test the relationship between foreign direct investment Financial Development and enterprise productivity.This dissertation is made of seven chapters. Chapter I, introduction. The main topic of this paper describes the background, theoretical and practical significance, introduces the research objectives, research ideas, structural arrangements, research methods, features, so as to provide clues to understand the full text structure; Chapter II, the literature review. Introduction the concept and knowledge of financial development, multinational corporations and foreign direct investment, and thus systematic review the literature of financial development, foreign direct investment and the relationship between them. Carried out on the basis of comments and made worthy of extended space research to determine the starting point of this study; Chapter III, constructed theoretical framework of this article. This section focuses on the "new new trade theory " framework, FDI enterprises need to crossed the threshold of productivity, as well as crossed the threshold of financing constraints, on this basis, explore the way of financial indirectly impact on foreign direct investment through productivity, and the way of financial directly impact on foreign direct investment through reducing financing costs, diversify investment risks, promoting technological innovation; Chapter IV, typical indicators and characteristics of the facts. The main content of this part of the article is to accurately measure the interpreted variable of Chinese foreign direct investment enterprises, as well as the main explanatory variable of financial development and productivity. On this basis, this article describe the typical characteristics of the facts; Chapter V, empirical studies of financial development with Chinese enterprises productivity. This part using Chinese provincial panel data, as well as a data of large sample of China’s "industrial enterprise database ", and according to the data structure using multi-linear regression model, dividing financial development into financial scale, financial structure and financial efficiency three aspects, to test the effect of financial development on productivity. The results show that the expansion of China’s financial scale, financial structure and financial efficiency can significantly enhance the promotion to enhance corporate productivity, also confirmed the indirect path to improve productivity by promoting financial development to affect foreign direct investment; Chapter VI empirical research of financial development, productivity and foreign direct investment of Chinese enterprises. This part using the data of2004-2011" Chinese Foreign Direct Investment List" announced by Chinese Ministry of Commerce which match with the data of " Chinese industrial enterprise database ", using Logit model, dividing financial development into financial scale, financial structure and financial efficiency three aspects, to study the impact of financial development on Foreign Direct investment, and the coordinating relationship between financial scale, financial structure and financial efficiency.Chapter VII, conclusions, policy implications and research prospects. Concludes this paper’s conclusions. Propose the corresponding policy recommendations for the reform of China’s financial and foreign direct investment.
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