Empirical Analysis On Exchange Rate Effect On Fdi Infolw Basic On Data Of Zhe Jiang Provice

FDI has played an important role during the30years development of China. FDI has solve the shortage of capital, at the same time, it also bring the advance technology and management. Zhejiang province has become the main place that absorbs the foreign capital, because of its geographical advantage and political advantage. The foreign enterprise has been an important driving force for development and makes contribute to the optimization of industrial structure, employment and tax revenue. now time, more and more countries participate into the wave of FDI, include between developing countries, from developing countries to developed countries. All kinds of FDI is certified to be the indispensable way at all develop stages. How to make use of foreign capital efficiently, and keep the high-speed, that’s a question.This paper analyzes the present situation of Zhejiang province of FDI and the RMB exchange rate.According to relative cost theory and the theory of wealth, if exchange rate is depreciate, the inflows of FDI will increase.This paper adjust the original FDI gravity model and establish the new model which is conform to the real situation of Zhejiang province. It analyzes the influence of RMB exchange rate on FDI in Zhejiang province. Hong Kong, the United States, Japan and Britain are the main source of FDI. The results show that the real exchange rate make effect on FDI from Hong Kong, Japan and Britain, but the FDI from the United States is less influence by real exchange rate, the United States was more concerned Zhejiang market scale and its i important position in China.This paper analyzes that the appreciation of the RMB will reduce FDI inflows of Zhejiang province, especially export-oriented FDI inflow. No matter FDI or export trade promote the development of Zhejiang. under the pressure of RMB appreciation, we should keep balance and keep relatively stable exchange rate.