The Research Of Influence Of FDI Policy On Industrial Structure

China’s FDI (Foreign Direct Investment)policies has played a positive rolein expanding foreign investment, guiding the inflow of FDI and optimizingindustrial structure since China’s reform and opening up. After30years ofdevelopment, China’s utilization of FDI is entering a new historical stage.Looking abroad, neighboring countries and regions have strengthened policies toattract FDI which increase pressure on China. Looking domestically, there aregrowing tensions on land supply, the rising of labor cost, the increasing pressureof energy saving and environment protecting. The long-term implemented FDIpolicies which prefer quantity than quality should be adjusted and improvedbecause it is incompatible with the requirements of industrial development ineconomic restructuring. As a medium and small-sized city in northern ZhejiangProvince, Jiaxing has been effectively and actively implementing FDI policiesfor long time and has taken lead in the province. FDI has become an importantdriving force for Jiaxing’s local economic development, not only boosting theeconomic scale, but also promoting the adjustment and optimization of theindustrial structure. This study is of important theoretical and practicalsignificance for local government to improve FDI policies in order to boost localeconomy and optimize industrial structure by effectively using FDI.The objective of this study is the influence of FDI policies on Jiaxing’sindustrial structure. First of all, the study theoretically analyzes the influence ofFDI policies on Jiaxing’s industrial structure and the transmission mechanism ofthe influence. Based on the theoretical analysis, the study reviews thedeveloping process of FDI policies and Jiaxing’s industrial structure, tries to findthe relations between FDI policies and the industrial structure from a historicalperspective, further analyzes the paths that FDI policies influence the industrial structure. As for the second industry, FDI policies influence the industrial scalethrough capital crowding-in and crowding-out effect, promote to form industrialclusters through industrial correlation effect, and adjust the product structurethrough adjusting trade structure. As for the tertiary industry, FDI policies drivethe development of producer services through developing manufacturing, anddrive the development of consumer services through expanding employment. Inaddition, the study analyzes the problems occurred in the process that FDIpolicies influence the industrial structure, mainly an uncompleteindustry-oriented FDI policy system, the city’s lower capabilities in industrialchains and technological innovation, inadequate protection and incentive forintellectual property right innovation and an uncomplete environment forindustrial development. To solve these problems, the study proposes to improveFDI policies to optimize the industrial structure, that is to improve theindustry-oriented FDI policy system, enhance incentives on innovation, andfurther improve the environment for industrial development.