The Influences Of RMB Exchange Rate Change On China’s Outward Direct Investment And Countermeasures

Outward direct investment is to point to the behavior that a country’s investors(investment country) acquire assets and gain control for the assets in another country(host country). Compared with bonds, the foreign stocks and other indirect investmenttools, its biggest characteristic is to get the control over the operation for the assets thatthey have acquired. From the90s of the last century, the continued expansion of outwarddirect investment has make it become an economic behavior that dominant the maintrend of world economic development. For China’s enterprises, outward directinvestment has become an ideal option to improve its international competitiveness assoon as possible. In order to encourage China’s enterprises to carry out outward directinvestment actively, and accelerate the pace of outward direct investment, the central putforward the strategy of "going out" at the beginning of1999. It is to accelerate the paceof Chinese industry to go to globalization, to make full use of two markets and tworesources, and promote the optimization and upgrading of industrial structure and theimprovement of international competitiveness. Since July21,2005, China carried out thereform of RMB exchange rate mechanism, the RMB exchange rate becomes moreflexible, RMB faces the huge pressure of appreciation. In the long run, the appreciationof the RMB will accelerate the speed of China’s domestic capital outflow, and makeschina’s outward direct investment lift a new climax. Therefore, on the basis of theresearch of home and abroad, this paper discussed the influence of RMB exchange ratechanges to China ’s outward direct investment.First, this paper expounded the status and problems of china’s outward directinvestment; Second, this paper expounded the influence of RMB exchange rate changesto China’s outward direct investment from the scale and structure by qualitative analysis.The result shows that there is a positive correlation between RMB exchange rate changesand the scale of outward direct investment; However, the results show that the influenceof RMB exchange rate changes to China ’s outward direct investment structure (locationstructure, industry structure, mode structure and main structure) is more complex. Third,this paper expounded the influence of RMB exchange rate changes to China’s outwarddirect investment by quantitative analysis. The empirical results show that theappreciation of the RMB will promote the growth of China ’s outward direct investment in the long term, while has no obvious influence on china’s outward direct investment inthe short term. Finally, on the basis of the previous research, this paper provided somecountermeasures and suggestions for china’s outward direct investment.