The Impact Of Change Of FDI On China's International Investment Position Sheet

Since the reform and opening up,China's capital inflows mainly embodied in the form of foreign direct investment(Direct Investment Foreign,referred to as FDI).According to the United Nations China World Trade Center Organization issued a"World Investment Report 2015",China's FDI scale was the first time over the United States' s FDI scale,China became the world's first foreign capital inflows country.FDI has long been the main way of financing in our country,which is an important part of China's international investment position table(Investment Position,referred to as IIP).On the one hand,FDI is the main part of liabilities in China's international investment position table.FDI is not only an important source of China's foreign exchange reserves,but also to a certain extent make up for FDI outflows of the early stage and profit repatriation,making net international position grow steadily.On the other hand,with the narrow gap funds in our country,the meaning of the use of FDI to alleviate the shortage of domestic funds gradually decreases.The FDI not only becomes the main body of China's IIP,but also gets high earnings.According to the traditional theory,FDI is generally considered as a long-term investment.When the economy is bad,FDI does not easily withdraw,so the impact of FDI outflows is small.However,in recent years,China's FDI in terms of inflows and profit remittances have undergone significant changes.Due to our economic structure adjustment,the cost of labor and investment preferential policies,foreign investment enterprises in China significantly reduced investment,and they prefer to invest in Vietnam,Laos and other low cost countries or regions,FDI showed higher volatility,in particular,retained profits has been accumulated over years and have a large stock in China,it effect instability of the IIP.Based on the background of the change in FDI,we make a research on the influence between FDI and IIP,based on the C Lessky model,from the three aspects of FDI and FDI into the withdrawal,remittance of profits analysis the influence mechanism,when the FDI is no longer inflows,the current inflow of FDI will not be able to compensate the early withdrawal of FDI and profits,this needs enough assets to pay,resulting a reduction in the size of net international position,eventually deteriorating the international investment position,especially considering the huge retained profits,it increases the international investment position risk.This paper is divided into six parts:The first part is an introduction,including research background,significance of the topic,the relevant literature review,the paper frame structure,the innovation and inadequate.The second part is theoretical analysis.It analyzes the C Lessky model,the relationship between FDI and IIP in China and its impact mechanism.The third part is a statistical description.Analyze of the impact of FDI on assets,liabilities,and net position major project of international investment position table.The fourth part is the empirical research.It demonstrates the reasons for the impact of FDI on IIP.Using co integration test and error correction model analyze and demonstrate the long term equilibrium and short-term fluctuation.The fifth part is the estimation and prediction.This paper mainly describes the estimation and prediction of the impact of FDI on IIP under different scenarios.The sixth part is the conclusion and policy suggestion.It puts forward the suggestions including the optimization of international investment position table,strengthening remittance of profits management,encouraging foreign investment outflows.