The Main Factors Contributing to Chinas FDI

Abstract

According to the data recently released by OECD, the world's foreign direct investment showed a significant decline of 42% in 2020. However, China's FDI rose against the trend, becoming the world's largest foreign capital inflow country for the first time, and surpassing the United States. This paper uses the data of the Chinese National Bureau of Statistics and Wind data to analyze the main factors contributing to China's FDI. The results show that in the overall multiple linear regression, only the ratio of exports and imports has a negative correlation with FDI, the ratio of foreign trade to GDP, population, and the number of international firms have positive and the trade war between US and China and Covid-19 pandemic are not significant for FDI, the coefficient of two variables is both negative. For the multiple linear regression by year, the significant influencing factors in different years are different and show volatility.