Dynamic Relationship between Agricultural Trade and FDI in China

On the basis of time series data from 1984 to 2006, co-integration analysis and VAR model are used to carry out empirical analysis on the dynamic relationship between the foreign direct investment in agriculture and the variable volume of international trade of agricultural products. Result shows that there is long-term co-integration relationship between the two. But it is probable that foreign direct investment (FDI) has substituted for improving in the short term and shows deviation from the long-run equilibrium relationship. Therefore, we put forward two policy proposals which are improving market system and strengthening the import management of foreign-funded enterprises