Study on the Effects of FDI in Chinese Forestry on Foreign Trade of Forest Products

Since 2000, foreign direct investment (FDI) has become the most common form of foreign capital utilization in Chinese forestry. In the year of 2008, the amount of foreign capital utilization in Chinese forestry achieved USD1.008 billion, while FDI accounted for 82.73%, that is USD8.34 billion. According to the trade and investment theories, FDI can have trade creation effect or trade substitution effect on the foreign trade of a country. This paper makes an empirical research on the effects of FDI in Chinese forestry on foreign trade of forest products and draws a conclusion: there is more creation effect than the substitution effect; and the effect on export is larger than on import. It is mainly because of the investment motivation and the characteristics of FDI in forestry. In the end, some suggestions are put forward to promote the foreign trade of forest products during the utilization of FDI.