The Output Effect Of China’s Industrial International Trade And International Direct Investment

In 2020,China put forward the concept of "double cycle" for the first time from the perspective of supply and demand.In the past 40 years,the domestic cycle and the international cycle have played an important role,especially the external cycle.The prosperity of international trade and the continuous inflow of international direct investment are important reasons for the excellent performance of China’s overall economy.The current situation of external cycle driving economic growth will not change substantially in a short time.Therefore,it is of great practical significance to clarify the effect of external circulation on output to promote the transformation of China’s industry and even the overall economic growth mode.The traditional method of measuring the effect of international trade on output has some limitations.This method only considers the direct contribution of international trade to output.Dunning’s international production compromise theory has proved that international trade and international direct investment are mutually penetrated and integrated.The continuous inflow of international direct investment will inevitably cause changes in the import and export activities of international trade.International direct investment is fed back to output through indirect effects.Therefore,when analyzing the output effect of international trade,we cannot analyze it alone without international direct investment.As the micro-basis of China’s economy,the industrial sector has a more intuitive effect in analyzing the output effect of China’s industrial international trade from the perspective of the industrial sector.Due to the lack of data on the industrial level of international direct investment,it is difficult to analyze the impact of industrial international direct investment on the output effect of industrial international trade.Because the traditional estimation method cannot solve this limitation,its estimation result will inevitably cause errors,Mislead economic policy.Therefore,it is of great theoretical significance to solve the lack of research fields caused by the lack of industrial international direct investment data by using the provincial level of international direct investment to conduct two-level modeling.This paper applies the two-level model to the study of international direct investment and international trade,taking 42 industrial sectors of 31 provinces in China in the last two years,2012 and 2017,as the research object.The industrial data is nested in the provinces,with the first level being the industry and the second level being the province.The data has obvious hierarchical structure.First,the data is tested to determine whether there is a hierarchical structure in the data and whether the two-level model can be used for modeling.Based on the expenditure method identity,establish a logarithmic linear regression model,introduce a two-level model,combine the factors at the provincial and industrial levels,and analyze the output effect of industrial international trade and international direct investment from the perspective of the combination of industry and province.Through the cross-level interaction item of the two-level model,we can analyze the impact of provincial and regional international direct investment on the output effect of industrial international trade,and make up for the research gap caused by the lack of industrial international direct investment data.On this basis,we will deeply analyze the output heterogeneity of industrial international trade and international direct investment to different regions and industries in China.The results show that there is a positive cross-layer interaction between China’s international direct investment and industrial international trade,that is,the output effect of China’s industrial international trade increases with the increase of international direct investment.The effect also varies among different regions.The central region is larger than the eastern region,while the western region is not significant.Among industries,there is only cross-layer interaction effect of the secondary industry.Industrial international trade still has a significant positive driving effect on output.In different regions,the central and eastern regions are greater than the western regions.In different industries,the tertiary industry is greater than the secondary industry and greater than the primary industry,and both have a positive impact on output.The positive spillover effect of international direct investment on output still exists.In terms of the size of the effect,the central region is greater than the western region than the eastern region.From the perspective of industry,the secondary industry is greater than the tertiary industry.In view of the above research conclusions,this paper puts forward relevant policy recommendations: the inflow of international direct investment is still an important reason for international trade to play the role of external circulation.The government should continue to deepen reform and opening up,and make greater efforts to introduce and utilize foreign capital.When introducing foreign capital,the focus should be on high-end manufacturing and high-tech industries.Geographically,the central and western regions should provide more preferential policies to attract foreign capital,It can maximize the effect of international trade on output.For international trade,efforts should be made to improve the industrial structure,eliminate backward production capacity and develop the tertiary industry;In different regions,we should help the industrial upgrading of the eastern region and transfer a large number of inefficient labor-intensive manufacturing industries to the central and western regions.At the same time,when introducing foreign capital in different regions of China,we should adjust measures to local conditions.When introducing foreign capital in the eastern region,we need higher technical level of foreign capital.The central region should receive strong guidance and support,and the western region should strengthen the construction of infrastructure to encourage the transfer of international direct investment to the western region.