Study On Impactsof China’s Outward Foreign Direct Investment On Export Commodity Structure

China’s OFDI(Outward Foreign Direct Investment) has experienced a rapid growth since the launch of “Going Out” strategy, leading to a trend of net outflow of capital gradually. Meanwhile, the development of China’s foreign trade is facing unprecedented challenges since the outbreak of world financial crisis. Particularly, the growth of export volume is slowing down, while the export commodity structure is facing the pressure of being optimized. Under the New Normal period, China needs to search for the new power of growth for the development of foreign economic and trade. Therefore, it is of great theoretical and practical significance to study on how to guide the rational development of OFDI and promote the optimization and upgrading of export commodity structure. This paper studies on the impacts of China’s OFDI on export commodity structure. There are totally 4 questions answered in this paper in terms of the impacts of China’s OFDI on export commodity structure, including the existence, conduction mechanism, plus or minus and size, as well as the optimizing recommendations. Eventually, this paper puts forward series of political suggestions, based on the adjustment and improvement of OFDI’s developing mode and environment, which are aimed at optimizing and upgrading the export commodity structure of China.In this paper, the theoretical analysis, mechanism analysis and current situation analysismainly explain the existence and conduction mechanism of the effects between OFDIand export commodity structure. First of all, in the part of theoretical analysis, this paper gives a systematical literature review of international trade theories, international direct investment theories and new new trade theories. The author claims that the traditional trade and investment theories give proofs to the existence of OFDI’s impacts on export volume and export commodity structure, and the research topic of this paper could be an inheritance and deepening of the academic traditions. Second of all, the mechanism analysis studies on the conduction mechanism of effects between OFDI and export volume, from the perspective of general demand theory in macro-level and uncertainty of host country’s market in micro-level. Meanwhile, it also reveals the influence mechanism of impacts among OFDI in different motivations on export commodity structure, through proposing the intermediate effects of industrial structure upgrading and technological progress. There are two conclusions for this part: on the one hand, in terms of export volume, OFDI can lead to the national income’s reallocation between home and host countries, thereby affecting the home country’s export scale towards host countries. On the other hand, in terms of export commodity structure, there totally exist 4 kinds of intermediate effects between China’s OFDI and export, including industrial pulling out effects, capital and intermediate product’sback-flowing effects, market expansion effects and reverse technological spillover effects. All the above 4 types of intermediate effects could contribute to the optimizingof China’s export commodity structureby means of upgrading the industrial structure and technological level.Thirdly, in the part of current situation analysis, this paper describes and compares the characteristics of China’s OFDI and export in recent years. The evidence shows the dynamic impacts between OFDI and export, in terms of volume and structure.As the key part of this paper, the empirical analysis studies on the direction and size of impacts of China’s OFDI on export. It mainly focuses on the following 3 questions:first is to verify whether it is the substitution effect or complementary effect between China’s OFDI and export volume; the second is to examine whether China’s OFDI has positive impacts on export commodity structure optimization; the third is to explore which kind of motivation types of OFDI has the biggest positive effects on China’s export commodity structure optimization.This paper applies a panel dataset covering 143 countries with which China was in investment and trade during 2003-2014. The empirical analysis usesmethodof panel data model,based on the datasuch as OFDI, export, investment motivations and other economic, institutional and geographicalindicators.The main purpose of this part is to test and compare the differences among heterogeneous motivation types of OFDI’s impacts on export commodity structure.The empirical results show that:(1) the influence coefficient of China’s OFDI on export volume during the year of 2003-2014 is 0.435.(2) The influence coefficients of China’s OFDI on export volume of low, medium and high technology added value products are 0.417, 0.424 and 0.460 respectively.(3) In the motivation screening model of path-wise OFDI, whose host country belongs to developing group, both coefficients of resource-seeking variable and market-orienting variable are significantly positive. While in the motivation screening model of inverse OFDI, whose host country belongs to developed group, the coefficient of technology-seeking variable is significantly positive.(4) The influence coefficient of China’s path-wise OFDI on export volume of low, medium and high technology added value products are-0.214, 0.396 and 0.374; while China’s inverse OFDI, the numbers are 0.157, 0.403 and 0.433.Through the above studies, the main conclusions of this paper are that:(1) China’s OFDI has demonstrated a significant complementary effect on export volume since the implementation of “Going Out” strategy.(2) China’s OFDI has significant positive impacts on optimization of export commodity structure.(3) Among all of the investment motivations, technology-seeking OFDI has the greatest positive contribution to the optimization and upgrading of China’s export commodity structure, which is also strengthened during the post financial crisis period. Specifically, it shows that as China’s technology-seeking OFDI increases by 1%, the export volume of high technology added value products increases by 0.433%. In accordance with this trend, OFDI could significantly raise the export proportion of high technology added value products.According to the conclusions of this paper and referenced experience of Japan in 1980 s, relevant political suggestions are put forward in the last part. The suggestions could be divided into two aspects: first is to enhance government’s leading function towards OFDI enterprises, including OFDI decision-making, such as motivation, location, industry, investors and entering mode. These efforts are aimed at promoting the rationalization level of China’s OFDI structure. The second suggestion is to activate government’s service function towards OFDI enterprises, in terms of legal protection, administrative approvals, tax preferences, financing supports, information disclosure, diplomatic relations, etc. These kinds of efforts could make contributions to improvement of OFDI facilitation level.