| The relations between investment and trade mainly include two: substitution effect and complement effect. The observed "net effect" in some countries is substituted, in other countries is complementary, but in academe the institutional factor is always not considered in related research, that means institution free. However, China is a big developing country in fast institution transition, the institutional factor should be attached much importance to.Based on empirical analysis, it is concluded that the net effect of investment on trade is complementary in China. From the dynamic perspective, what's the characteristic reflected from the change of this effect, and what's the influence made by institutional factor? This paper studies the effect that FDI has on China's industrial manufactures trade, including three aspects of product difference, regional difference and mode difference. We find that FDI greatly promotes industrial manufactures' import and export trade both in trade scale and competition, but that on the capital-intensive products is far more greatly than on the labor-intensive products. China stands in the top on the influence of industrial manufactures trade posed by FDI in the world, the eastern regional of China is more positively affected than the middle and western regional, the area with developed private economy is a bit more obviously facilitated than other areas in the eastern of China. We deem that the main factor which has caused the above differences of "net effect" is institution transition. Thus, in order to reinforce the complement effect of FDI on China's industrial manufactures trade, it is critical to accelerate institution innovation and perfect all kinds of institutions concerning utilizing FDI. Finally, the paper tentatively proposes some suggestions, which is helpful for China to strength advantages and weak disadvantages, so as to make better use of FDI in an opening situation and gain more benefits from comparative advantage. |
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