INTRODUCTION
Since, the late 20th century, foreign trade and foreign direct investment develop
rapidly and show the trend of accelerated convergence. The integration of trade
and investment has become an important force to promote Economic globalization
and world economic growth. Multinational companies affect the global industry
layout and structural adjustment profoundly by means of trade and investment
and realize the profit maximization.
For a long time, trade and investment relationship and their integration development
is the mainstream economists focus on the important issues. Since, the 1950s,
Foreign scholars formed the certain theoretical point of view through the study
of a country (or region) of foreign trade and investment relationship and its
influence on economic development. Such as the model of "alternative" (Mundell,
1957) "complementary model" (Markusen, 1983) "the
island model" (Kojima, 1978) "compensation investment
model" (Bhagwati et al., 1987), "relationship
between uncertain conclusion" (Patrie, 1994; Neary,
1995). On the macro level, these theory reveal the relationship between
different conditions of foreign trade and investment.
After the mid1980s, the economics of the new trade theory (Grossman
et al., 2006) and the industrial cluster theory Williamson
(1975) and Porter (1998) studied the trade and investment
location its influence on the development of the industrial spatial agglomeration,
these theory revealed the evolution of division of labor, element flow and the
internal connection of industrial agglomeration and explored the integration
of trade and investment integration with the global industry space associated
mechanism.
The international product cycle theory (Vernon, 1996),
OLI mode (Dunning, 1980) multinational company globalization
strategy (Yeaple, 2003; Grossman
et al., 2006) and so on, such theories illuminate the trade and investment
integration is the development of inner choice of the multinational company
under different conditions for trade and investment activities. Then, some scholars
carried on the empirical test on the relation of trade and investment of different
countries (regions) by regression analysis and granger test, panel data methods.
But previous scholars mainly refers to the definition of trade and investment
integration is a kind of international economic phenomenon of highly integrated,
interdependent and symbiotic development between foreign trade and foreign direct
investment. It is expressed as the formation of integration of trade and investment
when it promote the relationship between trade and investment. But it is lack
of quantitative indicators to measure the development level of integration of
trade and investment of such research method. This study put forward the concept
of coordination degree of foreign trade and investment system according to the
previous insufficient of quantitative measure of the development level of integration
of trade and investment, this study establish the coordination degree of foreign
trade and investment system to quantitative measure the development level of
integration of trade and investment.
Measure of trade and investment integration development level: The synergy
degree of foreign trade and investment refers to the harmony degree with each
other between the two systems in the process of development, it embodies the
trend of the integration of trade and investment system from disorderly to orderly.
It is the quantitative indicators to reflects the degree of the integration
of trade and investment development.
The calculation of coordination degree of foreign trade and investment system
mainly includes the following steps.
Design evaluation index system: It analyses the basic condition of the
integration of trade and investment and some various variables within the subsystem
of the foreign trade and investment, such as size, structure, location selection,
etc. It selects different evaluation index to measure the trade investment integration
development according to certain principles.
Determine the foreign trade and investment subsystem coordination development
level: It needs a dimensionless processing of data if the evaluation index
system of different data do not match the unit. It adopts factor analysis method
to determine the two subsystems inspects each year during the period of comprehensive
development level if the evaluation index is large.
Coordinated development of establishing regression equation on the basis of
a cointegration relationship in foreign trade and investment.
It defines the coefficient of the ratio between the subsystems of foreign trade
and investment cooperation and calculates synergy degree of two subsystems to
measure subsystem coordination degree between foreign trade and investment.
Analysis of the synergy results: This study uses the number between
0 and 1 as the measured values of synergy degree of foreign trade and investment
system by reference to energyeconomyenvironment about the classification of
the coordination degree proposed by Chinese scholars Liu
and Sun (2005). It means the two subsystems completely synergy of the ministry
of foreign trade and investment if the synergy degree is 1. It means the two
subsystems is not synergy of the ministry of foreign trade and investment if
the synergy degree is 0. It means the two subsystems is sectional synergy if
the synergy degree of foreign trade and investment between 0 and 1. The synergy
is much higher, the synergy degree more close to 1.
The level of trade and investment integration development can be divided into
three stages of six kinds of circumstances depending on the synergy degree,
as Table 1.
LEVEL OF TRADE AND INVESEMENT INTEGRATION DEVELOPMENT OF CHINA
This study establishes the model of synergy degree of foreign trade and investment
system using the theory of synergy to measure the development of China’s
trade and investment integration level.
Evaluation index system design: The development of the subsystems of
foreign trade and investment cooperation index system design should be guided
by the coordinated development of foreign trade and investment. This study design
an evaluation index of subsystem coordinated development of foreign trade and
investment which include 20 indexes. It contains three main aspects of the total
amount, structure and location from the angle of reflecting the degree of promoting
foreign trade and investment. The specific indexes of the subsystems as showed
in Table 2.
The Index data as Table 3 and 4 are got
through the China statistical yearbook.
Table 3 is foreign trade subsystem index data, it contains
ten indicators from 2002 to 2011, it includes four industry index and six distinguish
indicators.
Table 4 is direct investment subsystem index data, it contains
10 indicators from 2002 to 2011, it includes four industry index and six distinguish
indicators.
The study standardizes the above data to eliminate the influence, due to the
evaluation indicators of the unit is different in the above table which has
certain influence to the data statistics processing. The standardized data expressed
in matrix, this study adopts the centralized dimensionless method, calculation
formula as shown in Eq. 1:
Xij* is standard observations.
sj (j = 1.2.3,..., n) is j indicators observations (sample) mean value and mean
square error (samples), respectively.
Table 1: 
Synergy degree of foreign trade and investment and integration
development stage 

Table 2: 
Subsystem evaluation index 

Determination of coordination development level. (1) Consistent,
standardization of evaluation index 
Table 3: 
Foreign trade subsystem index data 

Data source: China statistical yearbook 
Table 4: 
Foreign direct investment subsystem index data 

Data source: China statistical yearbook 
Two subsystems of comprehensive development leve: This study determines
the two subsystem comprehensive development level of the calendar year by the
method of Factor analysis, respectively. The basic idea of Factor analysis is
to find out a few random variables which control all variables to describe the
relationship between multiple variables through the variable correlation coefficient
matrix, the random variables are referred to as factors.
Standardized data: This study uses the factor analysis of statistical
software SPSS10.0 to deal with the foreign trade of the 10 indicators and foreign
direct investment in Table 3 and 4 original
data and get the standardized data as shown in Table 5 and
6.
Table 5 is standardization of evaluation index matrix of
China’s foreign trade subsystem,
it includes ten index.
Table 6 is standardization of evaluation index matrix of
China’s Foreign Direct Investment
(FDI) subsystem, it includes ten index.
The correlation matrix R of the two subsystems of foreign trade and investment
data.
The correlation matrix R of foreign trade subsystem is shown in Table
7.
The correlation matrix R of Foreign direct investment subsystem is shown in
Table 8.
Matrix is not positive definite matrices: The eigenvalue and cumulative
contribution rate of the correlation matrix R.
The initial eigenvalues summation, Extraction of sum of squares loaded and
Rotate the sum of squares loaded of foreign trade subsystem correlation coefficient
matrix are include in Table 9.
Table 5: 
Standardization of evaluation index matrix of China’s
foreign trade subsystem 

Table 6: 
Standardization of evaluation index matrix of China's foreign
direct investment (FDI) subsystem 

Table 7: 
Correlation matrix R of foreign trade subsystem 

\
Table 9: 
Eigen value and cumulative contribution rate of foreign trade
subsystem correlation coefficient matrix 

Table 10: 
Eigen value and cumulative contribution rate of foreign direct
investment (FDI) subsystem correlation coefficient matrix 

The results concluded that the first two characteristic value of the cumulative
contribution rate has reached 90.938%, it explains the first two factors basically
all the information on behalf of the foreign trade subsystem, just take the
first two factors.
The initial eigenvalues summation, Extraction of sum of squares loaded and
Rotate the sum of squares loaded of foreign direct investment subsystem correlation
coefficient matrix are include in Table 10.
The results concluded that the first two characteristic value of the cumulative
contribution rate has reached 90.938%, it explains the first two factors basically
all the information on behalf of the Foreign Direct Investment (FDI) subsystem,
just take the first two factors.
Establish the factor pattern: Factor Pattern is rotated it as Maximum
variance and get the Orthogonal factor table of foreign trade subsystem as Table
11.
Factor Pattern is rotated it as Maximum variance and get the Orthogonal factor
table of foreign direct investment subsystem as Table 12.
Synergy development level: The factor F1 loading is much bigger among
the primary exporting in the orthogonal factor table, manufactured goods exporting,
other industry, Asia, Africa, The European, Latin America, North America and
Oceania in the foreign trade subsystem. F1 is the first and second industry
factor. Factor F2 loading is much bigger among net exports of goods and services
and other industry, so factor F2 is the third industry factor. Factor F1 loading
is much bigger among Africa, The European, Latin America, North America and
Oceania in the foreign direct investment subsystem, F1 is the regional factor.
Factor F2 loading is much bigger among Net investment, Agriculture, Mining and
manufacturing, other Industry and Asia, F2 is industry factor. The score of
the two factors from the factor score table.
The factor score of foreign trade subsystem is showed in Table
13, It contains two indicators, respectively FAC11 and FAC21.
The factor score of foreign direct investment subsystem is showed in Table
14, It contains two indicators, respectively FAC11 and FAC21.
The study gets the Level of development(F) of the two subsystems of foreign
trade and investment, the calculation formula of foreign trade and investment
is as follows:
F = λ1F1/Σλi+λ2F2/Σλi+…+λmFm/Σλi 
(2) 
λ is characteristic value, n is total number of characteristic value,
m is the number which is obtained, m = 2.
Table 11: 
Orthogonal factor table of foreign trade subsystem 

Annotation: Principal component analysis method rotation method:
With Kaiser standardized orthogonal rotation method convergence after 3
rotation 
Table 12: 
Orthogonal factor table of foreign direct investment 

Annotation: Principal component analysis method rotation method:
With Kaiser standardized orthogonal rotation method convergence after 3
rotation 
The study gets the coordinated development of comprehensive level of China’s
foreign trade and investment subsystems from 20042011 through the above methods
and get the comprehensive development level of the whole system according to
the weighted average, the weight of every subsystem comprehensive level is a
half, the result is as Table 15.
The coordinated development of China's trade and investment integration system
level which is drawed up according to the data in the Table 15.

Fig. 1: 
Coordinated development of China’s trade and investment
integration system level 
Table 13: 
Factor score of foreign trade subsystem 

Table 15: 
Table of China's trade and investment integration system
coordination development level 

From the Fig. 1 shows that trade development level, investment,
development level and the comprehensive development level are all in a rising
trend except in 2010, it instructions Foreign trade and investment has been
in the stage of expansion, Foreign trade and investment development level is
in a spiral phase from 20022005, it means the development is not the same at
different periods.
INTEGRATION OF DEVELOPMENT LEVEL
The study measure and calculate Chinese trade and investment integration development
level through the system synergy degree of foreign trade and investment.
Establishment of the coordinated development of the regression equation:
According to the comprehensive development level of the subsystems of the foreign
trade and investment, The study assume that X and Y, respectively the two subsystem
comprehensive development level of foreign trade and investment and determine
the following regression equation by SPSS10.0 software.
TRADE = 2.37449951172e06+0.744995117192x
INVESTMENT 
(3) 
R2 = 0.45 (2.557)
INVESTMENT = 1.48824398848e06+
0.603584342817xTRADE 
(4) 
R2 = 0.45 (2.556)
Synergy coefficient calculation
Formula: Establishing the coordination coefficient calculation formula as
follows according to the fuzzy membership functions:
W(i/j) = exp[K(Bibj)2] (K = 2/S) 
(5) 
W(i/j) is the synergy development coefficient of the subsystem j. Bi is the
actual value of comprehensive development level of the i subsystem. Bj is comprehensive
development level of the i subsystem synergy with the j subsystem and the study
can get the value through the collaborative development model, S is the variance
of Bi (Table 16).
T is foreign trade subsystem, I is investment subsystem and calculate W(T/I)
and W(I/T) by Eq. 5.
RESULTS
The study define the synergy degree of the subsystem of foreign trade and investment
as Eq. 6:
W(T, I) = 1min{W(T/I),W(I/T)}/max{ W(T/I),W(I/T),} 
(6) 
So, the study gets the synergy degree of the subsystem of foreign trade and
investment as Table 17 and Fig. 2.
The Table 17 contains subsystem coordination degree of foreign
trade and investment from 20022011, the collaborative degree changing trend
is uncertain, it reaches the lowest in 2006 and the highest in 2009.
Changing trend of synergy degree which is drawed up according to the data in
the Table 15 as Fig. 2, it shows the changing
tendency is uncerty.

Fig. 2: 
Change trend of synergy degree 
Table 16: 
Synergy coefficient of the two subsystems of foreign trade
and investment 

Table 17: 
Synergy degree of the subsystem of foreign trade and investment
of china 

CONCLUSION
Synergy degree of foreign trade and investment is low: The synergy degree
of the two subsystems of foreign trade and investment is slow. It is below
0.3 from 2002 to 2011, it means that the synergy degree is weak synergy and
it represents that China's trade and investment integration development at a
lower level in the early stage.
Variation tendency: The synergy degree of the two subsystems of foreign
trade and investment reduces slowly from 20022006. It means that foreign direct
investment development is behind the development of foreign trade after the
entry into the WTO although the foreign trade and investment are in a growth
trend. The synergy degree began to ascend after 2006 and at its highest point
in 2009. The reason is that foreign trade has fallen dramatically while foreign
direct investment has been on the rise affected by the global financial crisis.
But the synergy degree is not high still because of the difference between foreign
trade and foreign direct investment is bigger.
The study selects a number of indicators to calculate the synergy degree of
China's foreign trade and investment system on the basis of analysis the development
of Chinese foreign trade and investment. The synergy degree is still relatively
low, it suggests that China’s
trade and investment integration level is low and in primary stage, there are
some problems in the process of synergy.
China has introduced a series of foreign trade and investment policies to promote
the development of foreign trade and investment. The development of foreign
trade promotes the growth of the investment and it leads to the expansion of
foreign trade in turn. They interactive fusion and collaborative development,
but the synergy degree is not high. Foreign trade and investment cooperation
has many problems hind the development of trade and investment synergy.