A Study On The Influence Of FDI On China’s The Balance Of Payments

Since China’s reform and opening up, guided by the investment promotion and capitalintroduction policy, our country raised a hot wave of foreign investment. In the early, theinvestment is relatively small, its influence on China’s international balance of payments isnot significant; After1992, with the foreign capital inflows accelerating, FDI becomes themain form of foreign investment in our country, FDI is beginning to influence China’sinternational balance of payments, and becomes the important factors that affect thedevelopment of national economy in China. With the increase of foreign capital inflows,our country’s international balance of payments structure has changed, and the currentaccount and capital and financial account continue to keep the "double surplus" for manyyears, at present, with the recession of world economy and China’s labor advantage aregradually disappearing, Under the background, the study of the effect of FDI on China’sinternational balance of payments has important practical significance.Firstly, this paper combed the domestic and foreign experts about the study of theinfluence of FDI on the balance of payments, the analysis of the effect of FDI on China’sinternational balance of payments has laid a theoretical foundation, and then expounds theuse of FDI in China and the general situation of China’s international balance of paymentsAccording to the figure, I analysis the impact of FDI on China’s international balance ofpayments each subproject, and analyses that each component is not isolated, but interrelated,the final conclusion is that FDI have positive effect on China’s trade balance internationalpayments, and have a negative effect on investment income gap, the trade surplus is themain cause of the current account surplus; FDI have positive effect on capital and financialaccount. Then, the author establishes econometric model, using the statistical data from1997to2012, and cointegration analysis technology,the VAR model was established,based on the VAR model, I established the current account and the capital and financialimpulse response function of the project, and the current account and the capital andfinancial account for the variance decomposition. FDI has contributed about19%ofcurrent-account fluctuations, and about15%of the capital and financial account. At the endof this article, I put forward relevant policy suggestions on romoting industrial upgrading ofprocessing trade, service trade deficit, the moderate scale of foreign exchange reserves.