Fdi and International Trade Between The Eu and China
Fdi and International Trade Between The Eu and China

Summary/Abstract: Background and Objective: The relationship between FDI and trade has long been the subject of much economist research. However, many theoretical and empirical studies have not reached a universal and definitive conclusion. The prevailing view is that there may be substitution, complementarity and ambiguity between the two. The scientific goal of the ar-ticle is to explore the relationship between China's FDI and trade with the European Union (EU) and to examine whether it is complementary or substitute.Materials and methods: The paper selects China's imports and exports from the EU and China's total direct investment in the EU from 2005-2020 and utilises quantitative analyses. The co-integration analysis and Granger causality test analysis were conducted in this paper.Results: It can be concluded that there is a stationary linear combination and long-term equilibrium relationship between Chinese FDI to the EU and trade with the EU. At the same time, Granger causality tests revealed a bidirectional causality relationship between China's FDI and trade with the EU.Practical implications: This paper provides information on the relationship between invest-ment and trade when developed regions receive investment from a developing country. The study shows that Chinese investment in the EU and China-EU trade are mutually reinforced.Conclusion and summary: Chinese direct investment in the EU and China-EU bilateral trade interact with each other. A complementary relationship was found between China's FDI and trade with the European Union.

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