A Study On The Influence Of Business Environment On FDI Of China's Service Industry

In the context of economic restructuring and upgrading,various economies are actively introducing foreign investment.In 2011,China's Service Industry FDI surpassed Manufacturing Industry FDI for the first time,becoming the main target of foreign direct investment.As a "system sensitive" industry,foreign investors often pay more attention to the business environment of the host country when making direct investment.In order to promote FDI in service industry,China's provinces and cities have invested a lot of energy to improve the regulatory framework,so as to optimize the business environment.However,China has a vast territory,and the business environment in various provinces and cities is uneven.It is difficult for foreign investors to fully grasp the basic situation of the host country,which to some extent reduces their direct investment in China's service industry.Therefore,based on regional differences,it is of theoretical and practical significance to study the impact of business environment on the introduction of FDI in service industry.Based on the theories of FDI,trade-off and internalization of transaction cost,this paper analyzes the impact of FDI on China's service industry from the perspective of optimizing business environment.Firstly,it defines the concept of business environment and Service Industry FDI,and points out the measurement index selected in this paper,that is,taking Wang Xiaolu's "business environment index" as the measurement level of business environment,and using the actual amount of foreign direct investment in service industry to represent Service Industry FDI;Secondly,the paper analyzes the types of FDI in service industry from the perspectives of market seeking and export-oriented,the motives of FDI in service industry from the perspectives of demand and supply,and the conditions of FDI in service industry from the perspectives of FDI theory,trade-off theory and internalization theory of transaction cost theory;Secondly,it describes and analyzes the specific situation of China's business environment from the perspective of overall and sub regional,and analyzes the basic situation of China's foreign direct investment in service industry from the perspective of overall,inter regional,intra regional and sub industry,which provides the premise for the following empirical research;Finally,the annual data of business environment and Service Industry FDI in 28 provinces and cities from 2006 to2016 are selected to analyze the impact of optimizing business environment on China's Service Industry FDI.The comprehensive indicator of business environment is further divided into eight sub indicators,and the impact of sub indicators on China's Service Industry FDI is analyzed respectively.In addition,China is divided into three regions: the East,the middle and the West.This study shows that: on the whole,optimizing the business environment can promote the inflow of FDI in China's service industry,and there is a certain gap between the business environments in different regions,but optimizing the business environment can still promote the inflow of FDI in the service industry in this region.From the perspective of the components of business environment,honest government efficiency,moderate government intervention,excellent legal environment,open,fair and just policies,rich human capital,perfect infrastructure,stable market environment and low financing cost can promote FDI in China's service industry.Specifically,for the eastern region,human resource supply and service industry development potential are not the key factors affecting local service industry FDI;for the central region,infrastructure,financial services and financing costs,service industry development potential and opening-up level are not the key factors affecting local service industry FDI;for the western region,market environment and intermediary services Financial services and financing costs,tax burden of enterprises,economic scale,and the level of opening-up are not the key factors affecting FDI in local service industry.In view of this,on the basis of maintaining the traditional advantages of low-cost labor force and introducing preferential policies,this paper puts forward suggestions to promote foreign direct investment in service industry from the aspects of building a clean and efficient system environment,optimizing tax system and enriching human resources.