Research on the Trade Effects of China’s Direct Investment in ASEAN

Abstract

Based on the data of China’s direct investment and trade in ASEAN countries from 2004 to 2018, this paper established a variable parameter model, variable intercept model and constant coefficient model with panel data, and investigated the heterogeneous impact of China’s direct investment in ASEAN countries on their import and export trade and the impact mechanism. It is found that China’s direct investment in ASEAN will be deposited in the trade between China and 10 ASEAN countries, creating effects for trade, and the size of the effect varies with the host country. On average, when other factors remain unchanged, every 1 percentage point increase in China’s direct investment flows to ASEAN countries will increase exports to ASEAN countries by 0.54%, imports will increase by 0.44%. Further studies have found that our country to Brunei, Indonesia, the Philippines, Singapore and Thailand’s export create effect is greater than the imported create effect, on the whole, China’s investment in the five countries promoted the net exports, mainly on its investment in China, led to many mechanical equipment and other related products exports, and imports mainly import countries have their comparative advantages of products, variety is less.