International Financial Crisis Transmission and Impact Effects on Chinese Real Economy: Perspective of FDI

This paper analyzes the effects of economic contraction of US on Chinese real economy through the channel of FDI, using the VAR model, Granger-causality test and Impulse response function. The results show that the Macro-economy variables of China and US have tight and causal relationships. The economic contraction of US induces the drop of FDI inflow and export of Chinese foreign-funded enterprises, which impacting the output level of China further. China should focus on the quality and the multiplication of attracting FDI to avoid the impacts of FDI fluctuation on Chinese real economy.