Analysis of relationship between China's outward FDI and parent exports

In this article, we. present an econometric investigation using cointegration test along with the standard Granger's causality test to detect the existence and the directions of causality between exports and outward FDI from China. A conclusion has been reached that there exists a one-way causal relation from China's outward FDI to its export but with a four-year of time tag. Based also on Dunning's Theory of Investment Development Cycle, the authors probe into the status and developing trends of China's outward FDI. With the accelerated integration of its economy into the world economy, China, in its infancy of FDI development. and at a low ratio between FDI Outflow and inflow should treasure every chance to,develop its outward FDI and set it as a long-term strategy of China's sustained and stable development.