Research On The Process Of Promoting The Internationalization Of RMB By The Outward Foreign Direct Investment

In recent years,the continuous progress and development of the world's economy through crisis has gradually formed the economic development model on trade liberalization,investment facilitation and financial liberalization.The scale of capital flows in international markets gradually increased and the rate was also accelerating.The three main driving forces of China's economic growth are export,investment and consumption respectively.However,due to the global economic downturn and the impetus of foreign trade and consumption,the Chinese enterprises have embarked on a "going out" path and focusing on direct foreign investment in order to stimulate economic development,industrial restructuring and upgrading.In 2015,China made a historic breakthrough in its foreign direct investment,reaching US $ 145.67 billion,accounting for 9.9% of the world,making it the second largest foreign direct investment country in the world.Moreover,the amounts of ODI and FDI used by China were US $ 145.67 billion and US $135.6 billion respectively.For the first time,its OFDI exceeded its attraction of foreign investment in the same period and became the net capital exporter under direct investment.In 2016,2.46 trillion yuan of direct foreign investment is directly invested in RMB.Therefore,many scholars at home and abroad are studying the relationship between China's OFDI and the internationalization of RMB.The relationship between investment and internationalization of currency has not only become the academia hotspot,but also the focus of the news media.By doing the literature review,we may know that scholars now believe that there is a positive correlation between OFDI and internationalization of RMB,that is,with the increase of OFDI,the cross-border circulation and settlement of RMB will also increase,promoting the process of RMB internationalization.Meanwhile,the deepening of the RMB internationalization not only reduces the cost of China's OFDI but also the risks it faces to overseas investment.The inherent relationship between OFDI and the internationalization of RMB is mutual promotion and mutual influence.Followed on,in recent years,many scholars payed special attention to the relationship between OFDI and RMB internationalization,of which OFDI is foreign direct investment including multiple currencies such as USD,Euro and RMB.However,The relationship between direct investment and RMB internationalization further reveals the relationship between FDI and the internationalization of RMB under the circumstance of using RMB as the currency.After combing the results of theoretical research,this thesis will examine the results of existing theoretical research by empirical methods.Empirical study from the perspective of cointegration to study whether there is a balance between RMB OFDI and RMB internationalization,and whether the equilibrium relationship can be considered long-term.In addition,Granger Causality Test is used to verify the causal relationship between the two.The result of empirical research shows that the RMB outward foreign direct investment and the RMB internationalization are one-way causal relations,different from the results of existing theoretical research which claim that is mutually causal relationship.In other words,RMB OFDI is the reason of index changes of RMB internationalization in of Granger Causality,however,the changes in the RMB internationalization index is also the reason for the Granger Causality resulting in RMB's outward direct investment.Based on the results of theoretical research and empirical research,some suggestions are put forward: foreign direct investments are encouraged,especially the ones with RMB as their currency,so as to promote RMB internationalization.At the same time,improvement on the construction of cross-border RMB settlement facilities,strengthening the offshore RMB market,deepening bilateral monetary cooperation,promoting the reform of the exchange rate system should be emphasized to providing corresponding hardware and software support for RMB internationalization.