Research Of Impact Of EU FDI In China On Sino-EU Trade: Based On Empirical Analysis

Nowadays, China and EU have already become two main economic power forces in world economy, and with the fast development of their bilateral trade and investment relationship, these two parties are both playing major roles in world trade and FDI activities. Moreover, with the development of Chinese economy and Sino-EU bilateral trade, the scale of EU FDI in China has been expanded continuously in last decade, also bringing in high-technology and rich experience with them. This paper will mainly focus on studying the dynamic transition of the trade effect caused by EU FDI, we will combine theoretically, experientially and empirically analytical methods to define its changes, while explore the real reason behind it. In the end, come up the some practical suggestions.In this paper, we select EU FDI and Sino-EU trade statistics during the years between 1985 and 2006 as research objects, first briefly introduce the FDI and trade activities and major characteristic of both parties. Then, analyze how do the various factors which work on EU FDI inflow from the mother country effects Sino-EU trade system, will it be substitution or complementary for the import and export, and come to the conclusion that the trade effect will have dynamic change as processing of FDI. Therefore, by adopting Chow Test to pinpoint the breakpoints, we use Panel Date to perform empirical regression test on each phrase, and find the similar situation as we concluded there above. Up on that, this paper also perform some research of whether EU FDI has an positive effect on upgrading Sino-EU trade structure, and whether there is technology spillover from EU FDI, the result will help us to understand the role of EU FDI now is play on Sino-EU trade and also which phrase is it in. the result is that EU FDI dose promote our trade structure in certain degree, while the effect of its skill spillover is no as obvious, we give some explain after that. In the part of empirical test in this paper, we have adopt strict stationary test, cointegration test chow test and granger test to make our empirical test more believable.The conclusion of this research is that EU FDI and Sino-EU trade relation is in continuous progress in recent years, the empirical analysis has proved that EU FDI has different trade effect under different circumstances and developing phrases. However, the phased analysis shows that in recent years. EU FDI presents a complementary effect on export. Research also finds out that EU FDI has a positive impact on upgrading the Chinese trade structure toward EU in terms of capital-intensive industry, while has no conspicuous technology spillovers towards China.