Empirical research on the interrelation between US FDI in China and Sino-US economic growth

Nowadays, US foreign direct investment (FDI) has become not only one of material resources for Chinapsilas foreign capital introduction, but also important way to absorb advanced technology and management experience. This paper is an empirical research on the interrelation between the US FDI in China and Sino-US economic growth, adopting Johansen cointegration test, the Vector Error Correction Model and variance decomposition technology, based on analytical data in the period from 1983 to 2006. The studying result implies that it is the economic growth in China, rather than that in the US, that is the Granger cause of the US FDI in China; Both the US FDI in China and the economic growth in China are the Granger causalities of the economic growth in the US; But neither the US FDI in China nor the US economic growth is the Granger cause for the economic growth in China.