On The Economic Growth Effect Of FDI In China Based On Finance Development

China is the top developing country in introducing Foreign Direct Investment (hereinafter as "FDI"). The success of Chinese gradual reform partly benefits from the continuous inflow of FDI. FDI influences our country's economic growth based on capital formation effect, technology spill-over effect and employment effect etc. Whether FDI will play positive roles effectively on our country is restrained from many conditions, among which the development level of finance is one of the main factors. Our country's financial development level has been greatly improved since reform and opening-up. It is important both in theory and practice to research financial development on the economic growth effect of FDI in our country in order to further improve foreign investment policy and choose the direction of financial deepening reform.Based on economic growth theory, financial development theory and relevant FDI theory, and combining theoretical and empirical analysis methods, this paper proceeds to research on the following two issues: One is the micro mechanism for the financial development's influence on economic growth effect of FDI. The other one is the theoretical and empirical study on the influence of financial development on the capital effect and spill-over effect of FDI. Besides, this paper also puts forward some policy suggestions on fully playing positive effect of FDI on economic growth from the respect of deepening financial reform.The main results of this paper are as follows. Firstly, under the framework of neoclassical economics growth theory, this paper sets up a theory model on how financial development influences FDI capital effect. Then analyzes empirically using provincial panel data and concludes that the financial development level reduces FDI capital crowding out effect. Secondly, under the framework of endogenous economics growth theory, this paper sets up a theory model on how financial development influences FDI spill-over effect. Then analyzes empirically and concludes that the financial development restrains FDI spill-over effect. Thirdly, this paper puts forward policy suggestions on fully playing positive effect of FDI on economic growth from the respect of deepening financial reform.