Trade Liberalization And China Foreign Direct Investment Mode

In recent years,the development of regional trade liberalization is very fast.The number and quality of regional trade agreement increased sharply,China has accelerated the development of trade liberalization,and has signed 16 free trade agreements so far,investment content extend from goods trade expand to investment,trade in services,intellectual property right and so on.At the same time,China's foreign direct investment grows 14 years consecutively and has been second in 2016.The investment mode of China presents different types and characteristics with the development of economy and changes in the position of global value chain.And regional economic cooperation leads to larger market,reasonable division of labor,so the achievement of regional trade agreement become an popular approach to attract foreign direct investment.But the quantity of a country can attract FDI also affected by the surrounding countries,the improvement of the third country market will inhibit a country to attract investment obviously,Therefore,it is more necessary to consider the effect of regional trade liberalization.to foreign direct investment under the influence of the third country.In this paper,we firstly introduces the current research status at home and abroad about the pattern of foreign direct investment,the investment effect of trade liberalization,and the effect of foreign direct investment in the third country.Then we constructs a model basing on 3×3×2 knowledge-capital model,which mainly studies the stock of China's foreign direct investment from 2003 to 2015,studies China's foreign direct investment model from the perspective of the third country,the change of China's foreign direct investment mode in different stages and the impact of China's FTA strategy to foreign direct investment.Studies found that during 2003—2008 China's foreign direct investment model is the vertical direct investment model,during 2008—2015,it was mainly complex vertical investment mode.The third country effect is not negligible and must be considered.FTA plays an important role in China's foreign direct investment.Economic size,capital endowment,skilled labor endowment and political stability have important influence on attracting investment,while the cost of trade is an important impediment.Therefore,China should actively develop free trade agreement with “One Belt and One Road' countries,achieving Free trade agreements with higher levels and broader content,innovating foreign direct investment modes.The government should establish and improve the overall protection framework of China overseas investment.Improving laws and regulations on foreign investment,adhering win-win principle about efficiency and quality of foreign investment.