An Empirical Study Of China’s Use Of The Appropriate Scale Of Foreign Direct Investment

Since the reform and openness of China, China’s foreign direct investment(FDI) has gone through different stages of development. Especially after 1992, the scale of foreign direct investment has been expanding.In 1992,China’s actual use of FDI reached $ 11.008 billion and in 2011 the value reached$ 116.011 billion with increase of 954%.China has become one of the biggest countries to attract foreign investment.However,with the expansion of China to attract foreign direct investment, the negative effects of foreign direct investment began to appear.Whether China should continue to bring in FDI has gradually become the focus of scholars,who try their best to analyze the problem of investment from the perspective of theoretical and practical.On this basis,we analyze the moderate scale of FDI from the perspective of theoretical in this paper. Firstly this article analyzes the status and characteristics of China’s scale of FDI,and then with the help of the definition of FDI,we decompose the moderate scale into two parts and study the necessary and absorption scale of foreign direct investment from the theoretical and practical angle.The test results showed that the negative effects of the necessary scale of foreign direct investment have begun to appear in theory, but the absorption scale of foreign direct investment could be raised from the practical point of view. Finally,we get the theoretical value of the appropriate scale according to the principle of the appropriate scale of direct foreign investment,and we find that the overall foreign direct investment is at a moderate level.Then whether the proper scale of foreign direct investment in the future is in moderate size, whether or not to continue to introduce FDI? In the fourth chapter we illustrate this problem by establishing the ARMA model.The proper scale of FDI in China in the future could be predicted,and the results show that within the next few years China’s use of the scale of foreign direct investment may be excessive.Therefore, we need slow down the foreign capital level and make some recommendations on this basis.