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China's FDI Net Inflow and Deterioration of Terms of Trade: Paradox and Explanation
Author(s) -
Li Huizhong,
Huang Ping,
Li Jialun
Publication year - 2007
Publication title -
china and world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.815
H-Index - 28
eISSN - 1749-124X
pISSN - 1671-2234
DOI - 10.1111/j.1749-124x.2007.00055.x
Subject(s) - foreign direct investment , china , inflow , economics , international economics , capital (architecture) , international trade , capital outflow , balance of trade , tertiary sector of the economy , capital formation , market economy , economy , macroeconomics , human capital , financial capital , history , physics , archaeology , political science , mechanics , law
Starting from the contradiction between China's sustained growth in foreign direct investment (FDI) net inflow and deterioration of the terms of trade, this paper analyzes the characteristics of FDI sectoral structure since the 1990. Moreover, considering the international market competitive environment, this paper gives a concrete analysis of the influence mechanism and concludes that the flowing of FDI into labor‐intensive export sectors caused the deterioration of China's terms of trade. To improve its terms of trade, China needs to direct FDI inflow into capital‐ and technology‐intensive sectors and service sectors. (Edited by Xiaoming Feng)