Services FDI, services trade and the links to manufacturing: Evidence from China

Working with a panel data on services FDI, services trade, combined with a panel data of manufacturing industry for China for the period 2003-2011, we examine the role of services FDI and services imports as inputs in manufacturing, and we find significant and positive linkages between services FDI, services imports and manufacturing production, supporting the notion that increased services openness may promote the competitiveness of manufacturing industry. Each percent increase in services FDI and each percent increase in services imports resulted in an increase of 0.21 percent and 0.44 percent for manufacturing production respectively.