The Effects Of FDI From Different Sources On The Upgrading Of China’s Industrial Structure

The 19 th CPC National Congress pointed out that the current major contradictions in our society have been transformed into contradictions between the people’s growing needs for a better life and the development of inadequate imbalances.It can be seen that China’s industrial structure is currently uncoordinated,and the overall quality of each industry is low,so the upgrading of industrial structure are imminent.All of these problems are closely related to the industrial distribution characteristics of FDI.In 2015,China’s total FDI reached US$126 billion which has been a core driving force for the upgrading of industrial structure.Therefore,it is wise to efficiently use limited FDI,which will not only improve China’s production technology,but also improve China’s the industrial structure.Yet,the FDI from different sources has great differences in the scale of investment,investment direction and technical content.What’s more,affected by factors such as cost,traffic conditions and market environment,the location distribution of FDI in China is significantly different.Therefore,the paper examines the specific impacts of FDI from different sources on the upgrading of industrial structure in three major locations of China,and explores the differences and internal causes of the impacts,so as to propose targeted policy recommendations,which are more conducive to the implementation of differentiated foreign investment strategic measures,to release the biggest policy dividend.Based on the related literature review,this thesis studies the impact of FDI from different sources on the upgrading of industrial structure in various regions of China.Firstly,the paper analyzes the mechanism and role of FDI on the upgrading of industrial structure,and descriptively analyzes the current status of FDI,then uses AIS and RIS to measure the industrial rationalization and advanced level.This article divides FDI into four categories.HMT represents the FDI from Hong Kong,Macau,Taiwan;JKS represents the FDI from Japan,Korea,Singapore;US represents the FDI from the US,and OFI represents the FDI from other regions.Building a dynamic panel data model(GMM)to quantitatively analyze the effects of FDI from different sources on the upgrading of industrial structure.The empirical results show that the effects of FDI from different sources on the upgrading of China’s three major regional industrial structures are different.In the aspect of industrial structure upgrading(AIS),HMT has significantly inhibited the industrial structure of China’s three major locations;US has a significant boost;JKS has an inhibitory effect on the east and west,but promotes it in the central region.In therationalization of industrial structure(RIS),HMT has significantly impact on the rationalization in various regions of China;US has an inhibitory effect in various regions of China;JKS has a depressing effect on the industrial structure in the eastern and central parts of China,but it has a significantly boost in the west.Based on the empirical results,this paper proposes the following policy recommendations:(1)optimizing the FDI’s industrial investment type and location distribution;(2)optimizing the FDI’s source distribution;(3)fully releasing the technology spillover of FDI from different sources.