The Analysis On Trade Effects Of China’s Outward Foreign Direct Investment

China’s foreign trade has got a great development and it has become the world’s largest goods trading country since Reform and Opening-up. But after the financial crisis, the growth of China’s foreign trade began to slow down. In the first three quarters of 2015, the total volume of China’s imports and exports suffered a sustained negative growth. Exports in general trade grew rapidly, but the same in processing trade decreased, and exports of electromechanical products and high-tech products was better than that of labor-intensive products. It shows that the traditional trade mode characterized in processing trade and large labor-intensive products export cannot meet the new trade pattern in international markets. So trade transformation and upgrading becomes imperative. By comparison, the rapid development of outward foreign direct investment (OFDI) has made China become one of the largest foreign direct investor though it started late. After the financial crisis, China’s foreign direct investment still maintained a high growth rate, and the trend of it’s development is good. Currently, China has become a big country of trade and investment, so the study of finding the relationship between them becomes very meaningful under the background of integration of trade and investment.OFDI is the process that capital flows is the main content of multinational resources allocation, and the effect of OFDI is the external manifestation of that resource allocation. Through OFDI, the invest country can transfer the industries which have lost or will lose their comparative advantage to other country, which will optimize the domestic industrial structure and thus bring the optimization and upgrade of trade structure. According to the existing literature, domestic and foreign scholars have different views on the relationship between OFDI and international trade, namely substitutable and complementary relations. In particular, the regional distribution, industry distribution and investment type of OFDI will affect the foreign trade of the invest country. Overall, the complementary effect of OFDI on foreign trade is greater than the substitution effect, and a lot of empirical research results has confirmed this conclusion. And through OFDI, particularly for developing countries, it will be more convenient to acquire foreign advanced technology, to quickly understand and grasp the latest international technological developments, and to promote domestic technological progress.At present, with the proposal of "’One Belt and One Road" strategy, China will increase the export and investment to the countries along "One Belt and One Road", which will be an important force to promote China’s industrial and trade upgrade. Under the above background, the subject of this thesis is that study on the trade effect of OFDI in view of home country and explore the theoretical basis, the influence mechanism and the final effect of OFDI on China’s trade volume and trade structure upgrade.In order to test the trade effects of China’s OFDI thoroughly, this thesis selected the data of China’s OFDI, import and export volume, trade volume of manufactured products and capital and technology-intensive products in manufactured products from 1982 to 2013. And then adopted unit root test and cointegration analysis, did data regression on OFDI on import and export, manufactured products export, and capital and technology-intensive products export. Regression results show that China’s OFDI plays a significant role in expanding our country’s import and export trade, and the effect on export is larger than on import. Also, China’s OFDI drives the growth of the trade volume of manufactured goods and capital and technology-intensive products in manufactured products, namely China’s OFDI makes a long-term contribution to the upgrade of trade structure.The research route of this thesis is that raise question according to the development status of China’s OFDI and foreign trade firstly. Then launch the theoretical analysis, and make empirical analysis based on the data of China’s OFDI and foreign trade after Reform and Opening-up. Then according to the empirical test results, we can draw the concrete conclusion of the effect of OFDI on trade in China. Finally, on the basis of the empirical results and the current development situation of China, policy-advices on the development of OFDI and trade are put forward.Based on the current development situation of trade and investment, this thesis holds that China should expand foreign direct investment and make use of two markets and two kinds of resources worldwide through OFDI under the background of the "One Belt And One Road" strategy. Optimize the structure of OFDI, and promote the international transfer of backward production capacity and the adjustment of trade structure. Distinguish investment motives in developed and developing countries, and determine the appropriate type of investment according to different motivations. Attaches great importance to the coordination of investment policies and trade policies, and promote synergetic development of the two parties. Finally, speed up the internationalization of China’s financial industry, and provide more financial services for enterprises when investing overseas and trading.