Study On The Relationship Between FDI From U.S. To China And Bilateral Intra-Industry Trade

On the background of world economy integration, the economic relationship between China and U.S. becomes more and more tight. There is an increasing trend on Foreign Direct Investment (FDI) from U.S. to China, especially in manufacturing industries. Meanwhile, bilateral trade of some manufacturing products is Intra-Industry Trade (IIT). Therefore, the main purpose of this dissertation is to discuss the relationship between FDI from U.S. to China and bilateral IIT, and give some advices subsequently. There are four main sections in the paper. Section one are some theories which are the basis of following analysis. Section two analyzes the actuality of U.S. FDI in China, and finds a positive relativity between FDI and Trade. On the other hand, after testifying the IIT index about U.S.-China bilateral trade, a conclusion is made that there is existence of IIT in capital-intensive or techno-intensive products' trade; chemical product's trade shows a significant existence of IIT. And, U.S.-China IIT is mainly Vertical Intra-Industry Trade (VIIT). Lately, the paper explains effect of VIIT on China's economy. An econometric model is created in section three, in order to open out the relationship between FDI from U.S. to China and bilateral IIT. As a result, bilateral IIT and U.S.-China gap of economic development have a positive relativity, and the latter has a great influence on the former. Bilateral IIT and FDI from U.S. to China have a negative relativity, and the latter has an insignificant influence on the former. In section four, some doable suggestions are provided which are based on above analysis.