Advantages and disadvantages of direct investment by multinational corporations and its influence on China's economy
The premise and foundation for the formation of multinational corporations is transnational direct investment. Enterprises that make international direct investment often become multinational corporations, especially those that have full or partial control and management rights over a certain number of operating assets in two or more countries. International direct investment (FDI) refers to the international investment activities that investors conduct by directly setting up new enterprises, companies or merging existing enterprises in order to gain long-term investment benefits and gain control over overseas enterprises. From the perspective of a country, international direct investment is also called foreign direct investment or foreign direct investment. Multinational companies use direct investment to realize global business strategy. With the advantages of stable political situation, rapid economic growth, low factor cost, rich capital return, good soft and hard investment environment and large market capacity, China has become the country that attracts the most foreign investment. Many multinational companies invest in China, which not only promotes the economic development of China, but also brings some negative effects to China's economy. Next, we will analyze the impact of transnational direct investment on China's economy from both positive and negative aspects.
First, the status quo of multinational companies' investment in China
According to the latest Foreign Investment Report of China in 2003 issued by the Ministry of Commerce, more than 400 of the world's top 500 multinational companies have invested in China, of which nearly 30 have set up regional headquarters, and foreign investors have set up more than 400 R&D institutions of various forms in China. China is becoming an important production base, procurement base and R&D base for many multinational companies. This shows that many multinational companies realize that China market is the last huge market to be developed in the world. As a multinational company, without a firm China strategy, it is impossible to truly implement the globalization strategy.
1, country source. Among the top 500 enterprises with direct investment, there are 838 Japanese enterprises in China, accounting for 7 1% of the world's top 500 enterprises investing in China, followed by 18% of the United States, 9% of the European Union and 2% of other countries. In terms of investment scale, Japanese enterprises account for 56% of the investment scale of the world's top 500 enterprises in China, followed by the United States 2 1%, the European Union 20% and the other 3%.
2. Regional structure. The direct investment of multinational corporations is mainly concentrated in the east, and the proportion in the central and western regions is quite small. The direct investment of the top 500 enterprises in China is mainly concentrated in Shanghai, Beijing, Guangdong, Jiangsu, Tianjin, Liaoning and Shandong, and the direct investment of the top 500 enterprises absorbed by these seven provinces and cities accounts for about 80% of the whole country.
The top 3.500 investment enterprises have occupied an important position in some industries. The top 500 investment enterprises have played a prominent role in some so-called industries with particularly significant economies of scale and obvious trend of industrial globalization. Taking the automobile industry as an example, according to statistics, the world's top 500 enterprises have set up 100 in the automobile industry in China, including 23 complete vehicle enterprises and 77 parts enterprises, with a total investment of 654,380+0.275 billion US dollars, accounting for 62.6% of the total foreign investment in the automobile industry.
(Interviewee swot6 Note: I give you a comprehensive answer because these figures can give you a clearer understanding of its advantages and disadvantages. ))
Second, the impact of direct investment by multinational corporations on China's economy.
1, favorable influence
A reality that cannot be ignored is that China will still be a country lacking in capital and technology, and will still strive to become the manufacturing center of the world. In the process of upgrading industrial structure, and after upgrading, facing the competition from other regions, especially emerging economies such as India and ASEAN, it is still necessary to attract foreign investment, especially multinational companies, with certain preferential policies. At the same time, the direct investment of multinational corporations has also brought the following benefits to China's economy.
(1) is conducive to the introduction of funds. Due to the influx of investment from multinational companies, from June to July 2003, 22,245 foreign-invested enterprises were newly established in China, an increase of 19.3% over the same period last year. The contracted foreign investment amounted to US$ 5,965,438 +0.7 1 billion, up 33.96% year-on-year; The actually used foreign capital was US$ 33.354 billion, a year-on-year increase of 26.63%. By the end of July, 2003, 44,644 foreign-invested enterprises/KLOC-0 were approved, with contracted foreign capital of US$ 887,235,438+0 billion and actually used foreign capital of US$ 486,5438+320 million. Due to the investment of multinational companies, some urgently needed domestic projects can be launched in time and put into production as soon as possible, sharing investment risks and laying a financial foundation for the sound development of enterprise economy. Multinational companies not only simply invested capital, but also transferred a number of internationally competitive technologies, processes and equipment to fill the gap. For example, China's automobile industry, electronic appliance industry and so on are all developed with the help of foreign capital and technology.
(2) It is conducive to the upgrading of China's industrial structure and the introduction of advanced technology.
In today's society, technology is not only an important determinant for improving labor productivity, optimizing resource allocation and transforming economic growth mode, but also an important material carrier for multinational companies to realize complementary resources, mutual benefit and functional interaction in global operations, because foreign investment without technology output is often insufficient in competitive strength, market expansion and new product development capabilities. It is impossible to upgrade technology with the change of market demand to meet the changed market demand. Therefore, more and more multinational companies use their capital advantages and the location advantages of the host country's investment environment to control the core technology as a bargaining chip to realize the localization of technology investment. Technology spillover effect will inevitably occur in the process of capital export of multinational corporations. The so-called technology spillover effect refers to the involuntary diffusion of technology by multinational companies in the process of realizing technology localization, which promotes the improvement of local technology and productivity, while multinational companies cannot get all the benefits. It is a manifestation of economic externalities. Multinational companies have set up many R&D centers in China. Then the establishment of these institutions not only improves the R&D level of multinational companies, but also encourages many China enterprises to take corresponding measures to establish their own R&D centers through technology spillovers, personnel exchanges and personnel interactions.
(3) It is conducive to the transfer of manufacturing industry to China and improve the industrialization level of China. 10 years ago, in order to enter the China market, multinational companies invested and manufactured in China. After years of efforts, multinational companies have been able to successfully produce products that are accepted by consumers in China. 10 years later, the economies of scale formed by multinational companies combined with China's cheap labor resources made their operating costs lower and more competitive in the global market. This will prompt them to regard China as an important manufacturing base, accelerate the transfer of manufacturing to China, and make China one of the global manufacturing centers.
(4) It is beneficial to the development of supporting industries in China. After multinational companies enter, they need to use a lot of spare parts, so how to do it? One is to attract its supporting manufacturers abroad and provide them with supporting facilities. The other is to develop local supporting enterprises in China. This is what we call the correlation effect. Through this connection with the upstream and downstream of multinational companies, the supporting enterprises in China have developed, and a large number of local parts manufacturers have formed. Therefore, the docking of supporting industries and supporting enterprises in China is a very important starting point for China enterprises to go global.
Supporting the development of industries is also very important for the economic development of China, especially China. For example, the three major economic zones in China, the Pearl River Delta Economic Zone in the south, the Yangtze River Delta Economic Zone in East China and the Beijing-Tianjin-Tangshan Triangle Economic Zone in North China. Many multinational companies have set up production plants here, so through a large number of purchases, a large number of supporting enterprise groups have been formed, thus accelerating the economic agglomeration and development of this region. Therefore, the current pattern of three major economic zones in China has been formed.
(5) It has a positive impact on solving the employment problem in China. Judging from the number of jobs, foreign direct investment has increased employment opportunities in China to a certain extent; Overseas direct investment provides better wages, working conditions and social insurance benefits than domestic enterprises through overseas branches of multinational companies, and contributes to the improvement of employment quality in China.
2. Adverse reactions
(1) The influence of transnational direct investment on the development of local enterprises. In many cases, the crowding-out effect of foreign direct investment restricts the development of enterprises in China. There are generally two ways of this crowding out: one is that foreign companies have an adverse impact on the learning and growth of local enterprises in the product market; The second is to limit or increase the entry cost of local enterprises in financial and other factor markets. In the former case, once the direct competition of foreign subsidiaries hinders the possibility of local enterprises to engage in long-term learning, it will restrict or distort the growth of China enterprises. Although foreign subsidiaries have to go through local learning and personnel training, they have more resources and a lot of learning experience in this field at home. In this case, if local enterprises with potential competitiveness cannot compete with multinational companies, they will be squeezed out of the market. If local enterprises are excluded, it will have a long-term adverse impact on my family's economic development. This will lead to the fact that China's technological upgrading and deepening must rely on the decision-making of multinational companies, which will prevent China from reaching the higher technological level.
(2) The negative impact of transnational direct investment on China's environment. Due to the restriction of domestic eco-environmental laws and regulations, some multinational companies have transferred eliminated technologies, equipment, production processes and hazardous wastes to China, especially high-pollution intensive industries and high-tech technologies harmful to the environment. The realistic and potential negative impact of this trend on the ecological environment in China should be paid attention to by relevant departments. In short, it is an objective reality for multinational companies to transfer pollution through direct investment channels. The negative impact on China's ecological environment should not be underestimated or ignored. The international community and all countries, especially developing countries, must encourage large multinational companies to play a favorable role in the process of economic development, and at the same time pay enough attention to their adverse effects on the ecological environment and take effective measures.
(3) The negative effects of employment in China. When multinational companies close their subsidiaries in China, especially labor-intensive enterprises, a large number of workers will lose their jobs. If this withdrawal reaches a certain level, China will face severe social problems, and the rising unemployment rate will bring great pressure to China's politics and economy.
(4) The direct investment of multinational corporations does not always promote the growth of welfare effect in China. When capital flows into an industry and the enterprises in this industry occupy a monopoly position in the international market, due to the entry of new competitors, the output increases, the price of export products declines, and the trade volume and welfare of China decline. In addition, whether China can benefit from foreign investment depends on the assumption that China can absorb a large amount of capital without a sharp drop in the rate of return. However, if the growth rate of capital exceeds the growth rate of labor productivity, then productivity will decline, which will lead to a decline in returns.
(5) The adverse impact on China's balance of payments. In most cases, the international direct withdrawal of multinational corporations is extremely unfavorable to China's balance of payments and other economic goals based on it. Withdrawal first means the outflow of funds from China, which means the reduction of foreign exchange under China's capital.
Secondly, for China's import and export trade, divestment will lead to negative export or net export effect-the export driven by foreign-funded enterprises (including their own exports) will be greatly reduced, the corresponding import substitution will be reduced, and imports will increase, thus increasing the difficulty of current account balance. From the above analysis, we can find that the foreign direct investment of multinational corporations is a double-edged sword. To safeguard national sovereignty and safeguard national security, we must formulate correct countermeasures, actively resolve risks, foster strengths and avoid weaknesses, and seek advantages and avoid disadvantages. Don't give up eating because of choking, and don't take it lightly. In the era of economic globalization, enterprises should actively participate in it, constantly carry out system innovation and system innovation, make full use of international resources and markets, actively adapt to and participate in international economic competition, which means that enterprises must put their own survival and development space in the overall situation of global economic development and formulate global business strategies, so as to continuously improve the international competitiveness of China enterprises and further enhance the comprehensive national strength of the country. "
Author introduction and organization:
Liu Yong, majoring in international trade, Department of International Economics and Trade, School of Economics, Jilin University.
Director of teaching and research section, associate professor
Li and Sun Xiao, School of Economic Information, Jilin University.