Liberalization Of Foreign Investment And Innovation Of Chinese Enterprises

Over the past 40 years of reform and opening up,China’s economic opening-up has achieved great development in breadth and depth,and has been deeply involved in the global trade and investment integration pattern,among which attracting foreign investment(FDI)into China’s market is one of the most prominent performances.The continuous promotion of opening up,especially the attraction and utilization of foreign capital,has provided a strong and sustained driving force for China’s rapid economic growth,in which the reform and improvement of foreign capital policy has played a fundamental role in attracting and utilizing foreign capital.Generally speaking,China’s foreign investment access policy has always been in the direction of liberalization,which has significantly improved the level of China’s market opening to the outside world,and has also played a role in forcing the reform of domestic system and policy adjustment According to the report of the 19 th National Congress of the Communist Party of China,China’s economy has changed from a stage of rapid growth to a stage of high-quality development.High quality development puts forward new requirements for the development mode of China ’s economy.It is necessary to change from extensive growth relying on large-scale material resources investment to high-level sustainable development with the theme of technological progress and innovative development.At present,China is the second largest economy in the world,but the driving force of supporting high-speed economic growth in the previous stage is weakening.It is urgent to inject new driving force for economic development through innovation drive,and eliminate the impact of the declining traditional growth dividend in China.It can be said that innovation has become the core issue in the overall development of China in the future.In terms of external factors,foreign investment policies related to innovation activities have gradually become one of the focus issues China is facing in the international economic and trade environment.Marked by the launch of the 301 investigation into China by the United States,the United States has linked China’s foreign investment management policy with the issue of "compulsory technology transfer" and launched a crackdown on China on multiple occasions.In the past,China has implemented the policy of "market for technology" for foreign investment to improve the competitiveness of local enterprises.With China’s accession to the WTO,China has revised the contents of domestic laws and regulations that do not conform to the WTO rules,"market for technology" has gradually faded out in the official voice.The promulgation of the foreign investment law makes the compulsory technology transfer act illegal in China.In the past,China has widely implemented the requirements for foreign investment access to joint ventures,which is referred to by the United States as a means for China to indirectly implement "compulsory technology transfer".From the perspective of international law,this accusation is not in line with the reality,and the joint venture measures implemented by various countries for foreign investment belong to the compliance means.As far as the reality is concerned,the real effect of this policy on China’s innovation and development remains to be considered.This paper focuses on the core issue of the liberalization of foreign investment and the innovation and development of Chinese enterprises,discusses the impact of the liberalization of foreign investment on enterprise innovation from the enterprise level and industry level respectively,and separately analyzes the innovation effect of the requirement of foreign investment access to joint venture.This paper discusses the influence mechanism of foreign capital liberalization on enterprises’ independent innovation from the theoretical level,and finds that the influence of foreign capital liberalization on enterprises’ independent innovation in host country is mixed,which can produce both positive and negative effects.On this basis,this paper discusses the basic theoretical framework of enterprise innovation investment by constructing comb mathematical model,simulates the influence of different situations of foreign capital liberalization on enterprise innovation decision-making in a unified framework,and models the discussion of the above theoretical mechanism with mathematical language.In order to verify the conclusion of the theoretical analysis,this paper selects the combined data of "China industrial enterprise database" and "China enterprise patent application database" from 1998 to 2007 to test the innovation effect of foreign capital liberalization on Chinese enterprises.The results show that the increase of the share of foreign capital at the enterprise level has brought a restraining effect on the independent innovation of enterprises,which mainly comes from the wholly foreign-owned enterprises;while the inflow of foreign capital at the industry level can bring a positive spillover effect.The independent analysis of the joint venture requirements shows that the establishment of joint venture requirements for foreign investment strengthens the innovation inertia of foreign investment on host country enterprises,and the cancellation of joint venture requirements helps to promote the innovation of host country enterprises.The results of the expansion analysis show that the inflow of foreign investment will bring additional negative impact on the independent innovation of high-tech industries;the regression results of different types of patents show that the impact of foreign investment on enterprises applying for different types of patents is the same as the impact on all patent applications,but the effect of the impact is different;and the sub sample regression based on the differences in geographical location shows that foreign capital entry at the enterprise level has the greatest inhibitory effect on the innovation of enterprises located in west area,followed by eastern enterprises,but not significant for enterprises in central area;foreign capital entry at the industry level has the greatest promoting effect on the innovation of enterprises located in west area,followed by central enterprises,and the smallest for eastern enterprises.The conclusion of this paper shows that foreign investment has both advantages and disadvantages for the innovation and development of Chinese enterprises.Regardless of the impact of wholly foreign-owned enterprises,whether at the enterprise level or at the industry level,foreign investment will promote the independent innovation of China.However,the existence of joint venture requirements is contrary to the path of innovation and development of enterprises.Chinese enterprises have not really obtained the effect that is conducive to independent innovation from the joint venture requirements policy.The results of the expansion analysis show that the inflow of foreign capital will bring additional negative effects on the independent innovation of high-tech industries,while the regression results for different types of patents further confirm that the increase of foreign capital share at the enterprise level will have a greater inhibition effect on the high-level innovation of enterprises,and the "low-end locking" effect of foreign capital entry on the independent innovation of host enterprises is obvious.Based on these conclusions,this paper further puts forward corresponding policy recommendations.The first is to break the closed and fuzzy consciousness.Second,we should promote quality oriented policies to attract foreign investment and encourage the combination of foreign investment and post investment R & D.Third,we should reduce direct restrictions on foreign investment and improve China’s national security review mechanism for foreign investment.Fourth,improve the market-oriented system and build an effective innovation incentive mechanism.Fifth,we should strengthen the connection with international economic and trade rules through various channels,and gradually build a high-level investment governance environment.Sixth,we should enhance the ability of enterprises to digest,absorb and innovate again,and cultivate the main body of technological innovation.Seventh,further improve the investment environment of different regions and industries,and promote the overall coordinated development of foreign investment.Eighth,we will promote the reform of the ownership system of state-owned enterprises and improve their governance.