An Empirical Study On The Impact Of FDI In Service Trade In China

As the economic relationship has been increasingly close to each other and the process of economic globalization has been deepening in the world since 1960s, the international trade in services is developing very rapidly. The focus of the competition in the world had gradually shifted to the trade in services, and the international trade in services has become an important manifestation of the economic strength for the countries. Because the trade in services is very special, which can trade is not much more. The Foreign Direct Investment has become an important impetus for the development of the trade in services. The expanding scale of Direct Foreign Investment provides a new path for the development of the international trade in services. China, as the largest country that has attracted the most Foreign Direct Investment in the world, but the development of the service trade is relatively slow. The trade in services started late and the structure of trade is irrational; the development is backward and the competitiveness of trade in services is not high. These problems have seriously restricted the development of China’s service trade. Thus, the rational and efficient use of Foreign Direct Investment to promote the development of China’s trade in services and to improve the competitiveness of China’s service trade is essential.In this paper, regarding the theories on the investment and trade as the basis, learning from the relevant research on the impact of FDI on trade in services, and using the related data to make a comprehensive analysis on the use of Foreign Direct Investment and the development of service trade in China. Making the mechanisms and route that the Foreign Direct Investment has impact on the trade in service as a starting point, to study the impact that the actual use of Foreign Direct Investment has on exports and imports trade in services of China through cointegration and Granger causality test. At the same time, analyze the impact that the Foreign Direct Investment has on the international competitiveness of services in trade from the perspective of trade competitiveness index by simple linear regression. The results show that the actual use of Foreign Direct Investment in China has promoted the development of the trade in service, both imports and exports. Moreover, the promotion on imports is greater than exports. The Foreign Direct Investment is the Granger reasons of the change of the trade in services’ imports and exports, but the trade in services’ imports and exports are not the actual use of Foreign Direct Investment Granger cause; The Foreign Direct Investment has not yet promoted to improve the international competitiveness of the trade in services, and it will even inhibit the development of the trade in service in a small extent in China. Mainly because the trade in services in China started late, and the infrastructure is weak, the technology spillover effect of FDI is not transformed into a powerful driving force to the development of the trade in services in China. Based on empirical research, combining with the status quo of Foreign Direct Investment and service trade in China, offering the countermeasures and suggestions that make full use of Foreign Direct Investment to promote the development of the trade in service trade from three aspects:to make and adjust the reasonable policies that attracts investments; to enhance the ability of FDI to promote the development of the trade in services; and to improve the international competitiveness of trade in services.