Research on the Dynamic Relationship between Trade Openness, Foreign Direct Investment, Capital Formation and Industrial Economic Growth in China

Published: 20 December 2021| Version 1 | DOI: 10.17632/d4xd4445tg.1
Yuanyuan Hao


Since the reform and opening up, with the inflow of FDI and the strengthening of trade openness, China has become one of the fastest growing economies in the world. In addition, in the past few decades, China's economy has continued to grow steadily, attracting a large amount of foreign direct investment (FDI) inflows. From 1991 to 2019, the average annual growth rates of China's FDI inflows, industrial economy, and GDP were 13.5%, 14.4%, and 14.6%, respectively. Among them, China’s total FDI inflow in 2000 was US$4.0715 million, and was US$10,573,500 in 2010, with an increase of 159.7% from the same period in 2000. In 2019, the total FDI inflow was US$13.814 million, with an increase of 30.6% and 2.4% from 2010 and 2018 respectively. Nowadays, in the context of economic globalization, China has become the largest country of FDI inflows from developing countries, and the scale of FDI inflows is second only to the United States, ranking second in the world. However, while China’s foreign trade and FDI inflows are driving the rapid development of the industrial economy, compared with developed countries, China’s technological level has increased relatively slowly. The industrial economic growth is overly dependent on large amounts of capital, labor, and resources, resulting in the problems of resource shortages and environmental degradation being increasingly serious. Therefore, how to provide rational guidance for FDI industrial layout and trade openness structural adjustment, and give full play to trade openness and FDI to promote the transformation of China's domestic industry and national economic growth mode is of vital importance



Social Sciences