THE RELATIONSHIP BETWEEN EXPORT AND FOREIGN TRADE INVESTMENT INFLOWS IN CHINA (1979-2021): AN EMPIRICAL ANALYSIS

Abstract

Through an empirical analysis, this study examines the relationship between exports and foreign direct investment (FDI) inflows in China from 1979 to 2021. A surge in exports and FDI has accompanied China's remarkable economic growth and integration into the global economy. Understanding the dynamics and interplay between these two variables is crucial for policymakers and researchers alike. The study employs a comprehensive dataset from official government statistics, international databases, and academic research papers. Econometric models, including regression analysis and panel data techniques, analyze the relationship between exports and FDI. Control variables such as GDP growth, exchange rates, and trade policies are incorporated to account for other factors that may influence the relationship. The findings of the empirical analysis shed light on the nature and strength of the relationship between exports and FDI in China. As a result of empirical analysis, a long-term cointegration relationship is found between exports and foreign direct investment inflows in China between 1979 and 2021 in this study. Additionally, the research investigates the temporal dynamics of the relationship over the study period. The results of this study contribute to the existing body of knowledge on the relationship between exports and FDI in China. The findings have important implications for policymakers, providing insights into the effectiveness of policies promoting exports and attracting FDI. The study also identifies areas for further research and highlights the need for continued analysis as China's economic landscape evolves.