Analysis Of Foreign Direct Investment In China's Foreign Trade Relations

This paper studies the relationship between foreign direct investment and China’s foreign trade, to study the trade China ’s role in promoting foreign direct investmentin the use of quantitative analysis method based on review of international factormobility and international trade relations theory. As emerging economies, China isthe world’s most investor attention, China ’s FDI inflows grew steadily, hasmaintained a high level. In the past, mainly Western companies to invest in China totake advantage of China ’s cheap labor force, in order to re-export the products totheir domestic. Now, more and more Chinese enterprises to invest in China in orderto sell products locally. Chinese foreign policy at the beginning of the onset of theregion on a clear tendency in regional areas under the influence of FDI policies,regional Chinese FDI distribution show significant disequilibrium characteristics.Eastern region has been a center of foreign direct investment in recent years,however, affected by rising labor costs, FDI began to shift to the Midwest.Between foreign direct investment and trade could be an alternative, it could bea complementary relationship. Domestic and international theory and empiricalresearch literature in this paper reviews the literature on the relationship between theforeign literature focuses on the reasons for the existence of alternative orcomplementary relationship between the two studies, research methods domesticliterature are mostly based on theoretical study abroad on improvements in empiricalways to test the relationship between China ’s foreign direct investment and trade.From the results of previous empirical research, the relationship between theperformance of foreign direct investment and China ’s foreign trade is complementaryrelationship between alternative and mixed-sex relationships, and these relationshipshave their own arguments.In this paper, after review of the relevant literature from the perspective of thehistorical development of foreign investment in China to study the history and characteristics, studied the development process of China’s foreign trade and regionalpattern. Foreign Investment in China has undergone initial stage of development, anda new stage of rapid development stage, is now China has become the largest foreigndirect investment in developing countries to absorb foreign capital Midwest hasreached a new level; scale of China ’s foreign trade in goods experience from small tolarge development process, has made remarkable achievements, especially sincejoining the World Trade Organization, the broader market space so that China ’sforeign trade to a new level. Statistically speaking, foreign direct investment andforeign trade development in China is highly correlated, the existing literature alsopointed out the existence of a long-term relationship between foreign directinvestment and trade. Given China ’s vast land, the relationship between the existenceof regional differences in question is also a need to consider.Since joining the WTO, China ’s opening-round pattern begins to form, inaccordance with its WTO commitments, investment and trade facilitation in a gradualmanner. So we~2011to2002panel data for the relationship between foreign directinvestment in basic research and trade, the fixed effects model estimation resultsshow China to promote foreign direct investment is a type of trade, after taking intoaccount regional differences have also been similar conclusions. Foreign directinvestment in eastern, central and western promote the development of the relevantareas of foreign trade, due to historical differences in the economic base of theeastern Midwest in terms of the relative performance of a more significant role inpromoting. Eastern region of China is a major foreign investment, and foreigninvestment in a relatively small geographical restrictions and subject to Westernsupport of state policies lag absorbed. Relative to the central and western regions,promote the absorption of foreign direct investment in the eastern region of FIEs ismore obvious, and in foreign direct investment in the western was no significantdifference on the promotion of the role of trade. Relative to the higher inlandprovinces, coastal provinces the proportion of foreign capital utilization, andpromote the role of foreign direct investment on trade is also more pronounced.