Japanese Direct Investment in China and Sino-Japanese Bilateral Trade

摘要

This paper examines the effects of Japanese direct investment in China on Sino-Japanese bilateral trade. We find that Chinese import from Japan is positively correlated with the annual inflow of Japanese direct investment in China, but it is negatively correlated with the stock of Japanese direct investment in China, and Chinese export to Japan is not positively correlated. with the annual inflows of Japanese direct investment in China, but it is positively correlated with the stock of Japanese direct investment in China. These results indicate that rapid increase of Japanese direct investment in China may reduce the bilateral trade surplus for China temporary, but for long run, it may raise China's trade surplus.