Foreign Direct Investment on China's Balance of Payments

Abstract

With the acceleration of China's reform and opening-up process, the macro-economy is also developing rapidly, but in recent years, changes in the internal and external situation have all been seen as factors affecting the macro-economy, how to see the situation, how to formulate a reasonable policy to cope with the problem, has become the main task of the macro-economy. The balance of payments is an essential link in determining macroeconomic development. It is related to the balance and stability of domestic and foreign wealth, of which foreign investment is an essential part of China's opening up to the outside world, and most foreign investment is direct investment. The study of the impact of foreign direct investment on the balance of payments is of practical significance. Its main strategies of a trade conflict between China and the United States and the expansion of domestic demand in recent years can put forward valuable opinions, as well as guiding significance for stabilizing the exchange rate and guaranteeing the healthy development of the macroeconomy. This paper firstly summarizes and combs the research and theories on the impact of foreign direct investment on the balance of payments; secondly, it analyzes and summarizes the data on the status of FDI in China and China's balance of payments; then it conducts the theoretical, empirical analysis based on the theory; and finally, it draws the conclusions and realistic recommendations based on the above contents.