A Study On The Effect Of FDI Inflow Into Service On China's Economic Growth During The Economic Transition

China's economic is now in the key period of economic transition. The development mode of long-term high investment and high pollution is not sustainable for China anymore. Therefore, the national policy prefers to the service industry and with the improving openness of China's services trade, the proportion of services industry accounted for the GDP becomes higher and higher. Foreign direct investment on Chinese services industry are growing at an alarming rate. Great changes have also occurred in the service industry. Based on these facts, this thesis takes Chinese FDI inflows on the service industry and service transition as the research object and analyzes their relationships with China's economic growth.First of all, the thesis sorts the traditional manufacturing FDI theories and analyses their applicability on the service industry. Then, the thesis does research on the China's service industry FDI present situation and find out some problems existing in the current development period. Besides, according to the new theory of economic growth, this thesis analyzes the effect of the inflow FDI on service industry. The capital formation effect will directly promote the quantity of China's economic, and the technology spillover effect will speed up China's economic transformation in "quality".As for the empirical analysis part, firstly, through co-integration analysis, using the data from 1997 to 2014, the empirical analysis of the long-term relationship is studied. The result shows that the long-term stable equilibrium relationship between China's FDI inflow on service industry and GDP growth, and China's GDP growth is the Granger reason for the FDI in the service industry. Then, the ECM model is established to analyze the short-term fluctuation of China FDI in service industry and economic growth, as well as the relationship between service industry structure transition and economic growth. The result turns out that there is a significant positive correlation between China's GDP growth and service industry structure transition. Finally, the thesis put forward some suggestions on how to effectively use and the introduction of the service sector FDI.