Effect Of FDI On China's International Balance Of Payments

Withthe development of the global economy,the internationaldirect investment has developedrapidly bith in scale and in quantity, which has a huge impact on the global economy, making countries in the world closer and closer. Since reform and opening to the outside world, China has taken an aggressive strategy to attract foreign direct investment (FDI). the development speed of FDI in China is accelerating, as of2012, China’s FDI scale has been ranked in the forefront of the world. For a long time, FDI, as the main form of our country’s financing, has played a decisive role toaffect macro economy effectively and effiently in China, especially on its impact on the international balance of payments. On one hand, FDI factually eased the financing pressure, and also brought advanced technology and management. On the other hand, the huge undistributed profits accumulated may also cause threat to China’s international balance of payments which could not be ignored. However, in recent years, the fluctuation of FDI changed more frequently. Therefore, FDI is always pays close attention to the problem of Chinese scholars, researching on the influence of FDI on China’s international balance of payments has a great and far-reaching significance.This paper firstly introduces the relevant theories of international direct investment impact on the international balance of payments, carries on the analysis to the mechanism of FDI on the international balance of payments, and the related literatures. Secondly this paper introduces the evolution of FDI and development of international balance of payments. And then focus on the analysis of the influence of FDI on China’s international balance of payments of the project, the FDI mainly through foreign direct investment enterprises import and export trade surplus and foreign direct investment income to act on the current account, and have a direct effect on the capital and financial account. As the basis for the establishment of the empirical model test, the FDI and double surplus of China’s international balance of payments change has significant relationship. Finally, based on the above analysis, puts forward the corresponding policy recommendations.