Foreign Direct Investment And Intra-industry Trade

Going with the integration of trade and investment, the economic relationship between China and U.S. becomes more and more compact. The Foreign Direct Investment from U.S. to China is mounting up, especially in manufacture industry. At the same time, the character of Intra-industry Trade between China and U.S. is very distinct, particularly in the frame of manufacturing product. So, the purpose of this paper is to study the relationship between FDI from U.S. to China and the Intra-industry Trade. There are four sections in this article. Section are some theories which are the basis of following analisis. Section two establishs a frame to analyze the alteration of production and consumption under the three preconditions: obturation, opening and capital flowage, and has an opinion that there is a positive relationship between FDI and IIT. Section three calculates the G-L index in the whole industry and each industry between China and U.S., and has an idea that the character of Intra-industry Trade between China and U.S. is very distinct, particularly in the frame of manufacturing product; on the other hand, an econometric model is created in this part, in order to open out the relationship between FDI from U.S. to China and IIT. As a result, there is a positive relativity, and the fomer-has a great influence on the latter. Then , this section enumerate the actuality of the ecomonic development between China and U.S.. In section four, some conclutions are summarized which based on above analysis.