The Impact Of RMB Exchange Rate Movements On Japanese FDI In China

This paper analyses how the movements of RMB exchange rate influences Japanese's direct investment in China. There are tow way that the exchange rate movements influences Japanese FDI in China: the cost-effective and risk-effective. The FDI from Japan in China will be inhibited if RMB exchange rate appreciation or RMB exchange rate fluctuation expanded. Based on the analysis of statistics, this paper point out that: the manufacturing industries have been always the focal point of Japanese FDI in China, but after 21C the non-manufacturing industries act as the new growth point of Japanese FDI. In the manufacturing industries Japanese FDI in China, the export-oriented industries includes the electrical manufacturing, machinery manufacturing and the textile; the market-oriented industries includes transport manufacturing, food, lumber & pulp, chemical and metal. The RMB exchange movements could influence the rate of recurring profits of Japanese enterprise, and influence the Japanese FDI in different industries and type. The empirical analysis proves that influences exchange rate movements gives to Japanese FDI doesn't only exist in manufacturing industries but also some non-manufacturing industries ; the influences exchange rate's change gives to Japanese FDI in Chinese manufacturing industries doesn't only exist in export-oriented industries but also market-oriented industries.