FDI in services and China´s service export sophistication

This paper analyzes the mechanism of FDI in services impacting on China´s service export sophistication by theory, and it shows that FDI in services have both positive and negative influences on China´s service export sophistication. Then we try to test the relationship between FDI in services and China´s service export sophistication in accordance with the method of time series analysis in the period from 1997 to 2012. The empirical analysis results show that there is a co-integration between FDI in services and China´s service export sophistication, and FDI in services is the Granger cause of China´s service export sophistication according to the Granger cause test. We should expand the opening-up market of service trade and lead foreign direct investment to flow into modern services, so that we can promote the transformation of services and upgrade the level of China´s service export sophistication.