On The Flight Of Capital And Foreign Direct Investment In China

China's capital flight started from 1980's. It has gathered some new attributessince 1990's. The most apparent one is that the amount of capital flight and the inflowof foreign direct investment are positively correlated. This paper works on therelationship of the capital flight and foreign direct investment of China. It illustratesthe problem from two layers. One is to test on the relationship of China's capital flightand foreign direct investment to make sure they are positively correlated and explainthe correlation. The other is to give some suggestions on the countermeasures ofChina's capital flight. The result of this study suggests that because of the supernational treatment to the foreign direct investment, the relationship of capital flightand foreign direct investment is positive. So, this paper suggests that the governmentshould abolish the privilege of foreign investment and reinforce the supervision andmanagement of foreign investment. And also, the government should adopt somemeasures to shut down the channel of capital flight.