The Impact Of Manufaturing Development On Choices Of Foreign Direct Investment In China Services Sector

Over the past decades, China's foreign direct investment(FDI) has been focused on the manufacturing sector. In the 1980s,the focus of FDI in the world began to shift to services sector, especially the development of international trade in services sector, which has made the scale of FDI in services keep a rapid growth. And now FDI in services has become the new engine of FDI.In China, since the middle and latter half of the 1990s,FDI in services has represented high growth rate. Though the scale is far away from the FDI in manufacturing sector, it will become a integral part of FDI absorption. What is the key reason affecting FDI absorption in services in China deserves care analysis. From the essence of modern services industry perspective, as the customer of service industry, we think the scale the manufacturing industry has close link with service industry. Obviously, services FDI in China has direct linkage with China's manufacturing scale. Combining with the theory of services FDI, we try to explain the connection between the scale of manufacturing in China and services FDI absorption. Otherwise, the scale of different services sectors' FDI absorption is quite different. What is the reason of this difference? Is the level of connection between manufacturing industry and different services sector the determinant of this difference? So, foreign investors would certainly consider the development of manufacturing in host countries. Then, how the manufacturing industry influence our services FDI absorption? How is the level? Is the influence same to the different FDI in services sector? We study this question on the basis of theoretical research and empirical analysis. At last ,we come to some conclusions:Firstly, the development of China's services sector is far behind the developed countries, the proportion in national economy is very small. And it can not provide enough support to our development of manufacturing industry, which is the convenient conditions for those benefit-oriented multinational companies(MNCs) of services industry. Meanwhile, the characteristics of manufacturing industry in China is that the scale of FDI is a important part of manufacturing. And the MNCs' share of market in China is huge. So the demand of our manufacturing industry for services has changed to the demand of manufacturing FDI for services FDI.Secondly, local manufacturing companies and MNCs' impact on FDI flow into services industry is different. Compared with local companies, manufacturing MNCs' influence is more obvious. Moreover, the choice of MNCs flow into services industry in China is a comprehensive consideration. Besides manufacturing FDI, the scale of market, infrastructural facilities and human capital are also considered.Thirdly, manufacturing FDI's effect on different services sector is different. As the upgrade of manufacturing FDI, the demand for knowledge-intensive and technology-intensive industry is vigorous. Adversly, the demand for the traditional services sector is stable, and the connection between them is not obvious.At last, we give some suggestions how to take better use of FDI into services industry and how to strengthen the connection between manufacturing industry and FDI into services industry.