The Empirical Research Of Foreign Direct-investment Affect Economic Growth In China

China economy had experienced more than ten year’s rapid growth, foreign investment had also developed to be one of the important part of China economy during these years, there is no doubt that it takes a lot of positive influence on China economy. However, FDI has directly caused the unbalance economy growth in China to some extent, this is mainly because of the gaps between different areas sometimes are extremely big. And the unbalance status of economic development will be the obstacle of the overall country’s development. But with the tempestuous global economy in recent years, China’s economy has been showing a slowdown trend. Under the historical background of stabilize the growth and change the economic structure, how to consider holistic to utilize the foreign direct investment(FDI) reasonably to ensure the economy growth steady, healthy and supply power to reform has become one of outstanding economic issues.A large number of studies have refer to that foreign direct investment have taken a widespread and profound indirect effect on the growth except for its direct effect on economy as the supplement to domestic investment.The article choose provincial panel data from year 1996 to 2012, and take the output per person as the indicator to make the 28 provinces as three groups--high income group, middle income group and lower income group. And set 2002 as the key time node to make empirical test, for the analysis about the FDI’s effect on provincial economic growth if there is any significant changes before and after China joining the WTO. The results show that, the directly capital effect of FDI at high and middle income group is negative, it will hinder economic growth when compared with the domestic capital, while at the low income group the effect turn out to be positive; At high and middle income district, the capital accumulation effect of FDI have reversed at different times, the FDI which flowed into the two groups come to “squeezing in” and “squeezing out” domestic capitals at earlier term, and at later term they respectively characterized by “squeezing out” and “squeezing in”, but at low income region, FDI is keeping “squeezing in” domestic capital at the two terms; FDI’s technology spillover turn out to be negative to technical progress at high and middle income regions, and be positive at low income area; The influence of FDI on economic system also have significant difference at the three regions, FDI is the Granger reason to the economic system change at high-income area, but at middle and low-income areas are the opposite side. Finally, In the premise of take the economic growth as the ultimate goal, take some policy recommendations according to the conclusions that put forward, hope these suggestions can provide some reference to each area to utilize FDI effectively.