Research On The Impact Of The FDI Spillover On The International Competitiveness Of China’s Manufacturing Industry

With the continuous expansion of the depth of opening to the world,China has gradually relaxed the restrictions on the inflow of foreign capital,which has driven the rapid growth of China’s manufacturing exports.However,from the perspective of the global value chain,most of the products exported from China are still low value-added products.Facing the double squeeze of "re-industrialization" of developed countries and active participation of developing countries,it’s an important issue for China to enhance the international competitiveness.Since China gradually liberalized the entry of foreign capital,this paper attempts to figure out the impact of FDI spillover on the actual international competitiveness of China’s manufacturing industry.By now,the research studying the impact of foreign direct investment on international competitiveness mainly focuses on the horizontal spillover.Based on this,this paper measures the inter-industry spillover and analyzes the impact of FDI’s forward spillover and backward spillover on the competitiveness of China’s manufacturing industry.In addition,this paper uses domestic value added in total exports to re-measure the international competitiveness based on Koopman’s(2010)framework.As the characteristics of industry may affect the significance of the FDI spillover,this paper classifies industries based on their technology level characteristics and studies how FDI spillovers impact international competitiveness of industries.The main conclusion of this paper includes following aspects: With the gradual liberalization of foreign investment restrictions,the volume of foreign investment introduced into China has increased significantly,while there is still a problem of unbalanced regional distribution and a relatively single source of foreign investment introduced into China.At the same time,the total exports of China’s manufacturing industry have increased significantly,and the international competitiveness was rising steadily.To be specific,the international competitiveness of high-tech industries has increased significantly while that of low-tech industries has declined.The empirical research shows that the introduction of foreign investment will significantly affect the international competitiveness of China’s manufacturing industry through three channels:horizontal spillover,forward spillover,and backward spillover.The horizontal spillover has a negative net effect on the international competitiveness of the industry,while forward spillover and backward spillover both have significant positive spillover effects on the international competitiveness of the industry.Considering the industry heterogeneity,the effect of FDI spillovers in low-skilled industry in line with the whole industry,while the forward and backward spillover in high-skilled industry was not significant.Based on the findings above,this paper gives some suggestions to improve China’s foreign investment policy system and international competitiveness of China’s manufacturing industry.The government should improve the quality of foreign investment introduced into China,encourage foreign enterprises to integrate into the domestic production chain,and actively guide foreign investment to flow to the central and western regions.In addition,to improve the international competitiveness of China’s manufacturing industry,Chinese government should further expand the opening-up to the world and steadily promoting the reform of state-owned enterprises.