Foreign trade outpaces investment as China's growth engine, study finds
A two-decade analysis of 30 Chinese provinces reveals that exports and imports drive economic growth more effectively than foreign direct investment. The finding exposes a regional development gap that could shape trade policy: coastal provinces benefit disproportionately, while interior regions lag, signaling potential opportunities for infrastructure-focused interventions.
Originaltitel: FDI, FOREIGN TRADE AND ECONOMIC GROWTH
With the acceleration of China's reform and opening-up, and the expansion of foreign trade, foreign direct investment (FDI) and foreign trade have become the main force driving China's regional economic growth. This paper studies the impact of FDI and foreign trade on economic development. By using the panel data model, the data of 30 provinces in China from 2001 to 2020 is analyzed, showing that FDI and foreign trade are positively correlated with economic growth for China. Compared with FDI, foreign trade can promote China's economic development. In addition, there are apparent differences in the impact of FDI and foreign trade on economic growth between eastern and middle and western provinces, and the economic development of China's provinces is uneven. In order to alleviate the unbalanced development, the Chinese government should: 1. Speed up infrastructure and transportation construction; 2. Differentiate regional trade policies; 3. Coordinate and strengthen cooperation among the eastern, middle and western regions.