Research On Relationship Between American FDI In China And Sino-US Trade Imbalance

With the rapid development of economic globalization and international trade, China and America formed a close trade partnership. However, the imbalance of Sino-US trade becomes increasingly evident. China forms a huge trade surplus, while America has a surplus with China in the aspect of direct investment. The imbalance of Sino-US trade not only makes more trade friction, but also affects the economic development of both of the countries, even influences the whole world’s trade balance. It’s necessary to study whether there is relationship between American direct investment in China and Sino-US trade, and how they make effects.This paper starts from the overview of the theoretical and empirical aspects of the relationship between international direct investment and international trade. Then, it analyzes the development of Sino-US trade, and explains the imbalance issue through characteristics of trade scale and trade structure. And then, this paper describes development process and situation of American direct investment in China, and summarizes its characteristics in view of investment movies and investment structure. After that, it makes empirical analysis on relationship between the imbalance of trade scale and trade structure and American direct investment. Most of previous studies analyzed from the perspective of Sino-US trade scale, but less researched further from trade structure, which is the innovative point in this paper. After the empirical test of the relationship between American direct investment in China and Sino-US trade imbalance, on basis of SITC classification, this paper makes empirical test of Sino-US trade structure imbalance, with the method of ADF unit root test, the E-G two-step test, the error correction model approach and the Granger causality test. Thus, the research result is more scientific and convincing. Finally, provides some recommendations on the settlement of the Sino-US trade imbalance.The main ideas includes:first, Sino-US trade surplus is mainly concentrated in labor-intensive products and capital-or-technology-intensive products. Second, American direct investment in China includes two types, low-cost-oriented investment and market-oriented investment, and the investment is mainly concentrated in manufacturing, oil exploration, and finance. Third, American direct investment in China impetuses Chinese exports and surplus to America, and it will expand the surplus, especially in labor-intensive products and capital-or technology-intensive products.