An Empirical Study On The Impact Of Money Laundering On China’s Foreign Direct Investment

As the global economy development rapidly, foreign direct investment (FDI) in the world’s economy is playing an important role increasingly. Developing countries or countries with economies in transition areas need a lot of capital, And china is the largest developing country in the world, Foreign direct investment has become the main form of attracting foreign investment, And distributed in china’s manufacturing, wholesale and retail trade and real estate mainly,. However, the flow of foreign capital region has a great imbalance significant gap between the east and west.The factor affecting FDI and the flow of foreign capital region is multifaceted, Both in the traditional economic variables, and factors related to illegal money laundering, illegal capital flight, corruption, etc., and when foreign direct investment has the motivation of money laundering, the role of traditional economic variables may change its influence significantly, disrupt the flow of foreign capital various sectors and regions. In the process of net inflow of capital from the developed countries or regions continuously, the crime of money laundering also will be spread over from developed countries or regions, together with these money-laundering offenses within countries. The study on the correlation between money laundering factor and FDI has important theoretical and practical significance to fight against money-laundering offenses and control the inflow of illegal funds..Based on the above background, this thesis focuses on the impact of money laundering on FDI in China, and put forward policy recommendations with targeted hrough empirical analysis. Firstly, Based on the relevant theory and research literature summarized several aspects of the size of foreign direct investment from China, the trade flows and the flow of foreign capital region, summarized the status of the regional distribution of foreign direct investment, Furthermore, investigate money laundering based on relevant theories of foreign direct investment of money laundering. Secondly, based on 2007-2013 foreign ownership of listed companies, drawing scholars existing research results to knowledge capital model(KK model), location model(LM model) for the study, make an empirical analysis on money laundering of foreign direct investment. The results show that there are differences affect of the traditional factors to foreign direct investment, and the emergence of this difference lies in whether the money laundering motivation, resulting in high-risk and low-risk money laundering funds entering the country in different sectors. Overall, money laundering promote foreign direct investment to flow to china’s manufacturing, real estate and the overall industry, control foreign direct investment in wholesale and retail trade. And money laundering on the location choice of FDI in China has positive impact significantly, high risk of money laundering tend to flow to the areas of high corruption,, more preferential policies, control to flow to the areas of the high of combined effect, higher education, good infrastructure areas; low risk of money laundering tend to flow to the areas of higher corruption, more ports, larger market size, more preferential policies, better infrastructure. Finally, we give some policies and recommendations, namely it can let the theory of foreign direct investment richer, and to optimize the utilization of foreign investment. But also it can provide an effective way for China to combat money-laundering offenses.