A Study On The Impact Of China 's Direct Investment In ASEAN On Domestic Industrial Upgrading

In an open economy, the flow and transfer of international resources and elements can promote industrial upgrading,and foreign direct investment will contribute to achieve the fast flow of various factors and achieve the optimization of resources. Adjustment of industrial structure is not only an important tool to change the way of economic development,but also the focus of contemporary social development, foreign direct investment is an important and effective way to promote China’s industrial structure upgrading. Since China and ASEAN established longterm cooperation in the 1990 s, ASEAN has become China’s important strategic environment international partners, especially the built of China- ASEAN Free Trade Area in 2010, ASEAN gradually become the main target of China’s foreign direct investment, the level of economic development of both sides has been significantly improved.This paper reviews the stages of investment development, small-scale technology theory,technology localization theory of foreign direct investment in developing countries and Petty- Clark Principle, per capita income of theory,Hoffman industrialized rule of thumb of industrial upgrading,then read in conjunction with a large number of domestic and foreign literature on foreign direct investment and industrial upgrading, examine the effect of domestic industrial upgrading by analysis Chinese direct investment in ASEAN with means of classical literature analysis,empirical analysis,chart analysis and model citation analysis.Analysis situation of Chinese direct investment in ASEAN and situation of Chinese industrial structure through the collation of data at the same time. China’s direct investment in ASEAN can release domestic factors of production, support emerging industries; promote domestic industrial upgrading through reverse technology introduction; promote the development of related domestic industries through investment in strong associated industries. On the other hand, China’s direct investment in ASEAN will lead to outflow of capital from the home country, reduce the capital supply, limit the development of emerging industries of the mother country,and catch up the home countrys’ industries,make industrial entities in the "hollowing out" status at least. Secondly,verified the Chinese direct investment in ASEAN has apositive role in promoting domestic industrial structure upgrading by quoting and modifing Chenery’s model of "standard structure" which combined with China’s national conditions with the methods of ADF test, cointegration test, Granger causality test, impulse response function and variance decomposition test,and verified the more direct investment in ASEAN,the greater role in promoting to industrial structure upgrading. Finally, we can get conclusion that both theory and empirical can verifiy Chinese direct investment in ASEAN has positive role in promoting domestic industrial upgrading according to the results of the foregoing analysis, then make policy recommendations combined with China’s current economic development.