Study On FDI's Impact On Foreign Trade In The Three Major Regions In China

The sustained growth in trade surplus and foreign exchange reserves are big problems for China's economy. Serious pressure of apreciation and terrible inflation are what China has to face. FDI is the key point in China's long preiod trade surplus, so what do we need to solve is that how we could use FDI more efficiently and reasonably in order to help China become the"Trade-Power Country". This is a hot spot that need to study. There're serious regional differences in China, so there may be huge uneven in the distribution of FDI and trade. For example, there're may be serious differences between central-western region and eastern region. To study FDI's impact on trade in these regions, we can't stand in the national level, or we'll not find the correct relationship between FDI and trade. As a result, we should study the inequality to give the resonable policy recommendations.The author uses three groups of panel data, the datas cover the preiods of 1993-1998, 1999-2003, and 1999-2003. With these datas, the author uses fixed effect model to study the FDI's impact on the three major regions in China.Main findings in this paper:â‘ Between 1993 to 1998, FDI in the eastern region showed its notable creative-effect to import; Between 1999-2003, FDI in the eastern region showed its notable creative-effect to export.â‘¡Between 1993 to 1998, the empirical analysis result showed that there's no notable link between FDI and trade in central region; Between 1999-2003, FDI in this region showed its notable substitution-effect to export.â‘¢The empirical analysis result showed that there's not any notable link between FDI and trade in western region neither between 1993-1998 nor 1999-2003.According to the conclusion of this study, the author suggests that: guide the FDI flow into central and western regions, and lead the FDI in eastern region flow into high-tech industry and make the trade-oriented FDI transform into market-oriented type.