An Analysis of the Relevance between US FDI in China and Sino-US Economic Growth

Since 2005, the US have been the third largest foreign direct investment (FDI) entity in China, next to Hong Kong and Japan. Based on the related literatures at home and abroad, this paper analyzes empirically on the interrelation between the US FDI in China and Sino-US economic growth. The studying result shows that economic growth in China is an essential cause for the US FDI in China, both in the short and long run. While the US FDI in China is enhancing the US economic growth, there is little evidence showing that it has promoted China´s economic growth. Finally it is concluded that the introduction of foreign capital should be organically combined with the promotion of economic growth. Relative suggestions are given on the better use of the US FDI to boost the economic growth in China.