Analysis of Impact Mechanism of Foreign Trade on Real Economy in China

There is close relationship between foreign trade and economy growth. China´s export trade and import trade develop rapidly and foreign direct investment is becoming more and more since China´s reform and opening up which can make impact on China´s real economy development. The impact mechanism of foreign trade on real economy in China has been analyzed by using yearly data from 1982 to 2009 based on China´s actual development and theory of foreign trade and economy growth. The results show that there is cointegration relationship between China´s real economy and foreign trade in the long term as well as causality in the short term and the impulse response of China´s real economy to foreign trade is sensitive. It indicates that foreign trade can promote China´s real economy growth. According to the international competition of foreign trade, China should focus on adjustment of trade structure and improve the quality of export products.