Recently,Japanese government and media always complain that their ODA only benefits China and hurts Japan,while some scholars in China argue that the initial goal of Japan’s ODA is for serving their trading with and investing in China,not for China’s development.Both opinions are plausible and waiting for reliable evidence.This paper use Dynamic Least Squares Method to estimate the co-integrated relationships among Japan’s ODA,Japan’s FDI to China and China-Japan’s bilateral trade,and then test the Granger causality relationships among them.Our econometric analysis indicates that Japan’s ODA do push up the bilateral trade and Japan’s FDI to China.There clearly exists a Win-Win link.At the same time,we found no evidence for some Chinese scholars’claim that ODA decisions of Japanese government have been driven by the bilateral trade and investment.
Since 1979, loans from international financial institutions has cumulated to several tens of billion dollars and been an important source of external debt in China. Its ratio to external debt is relatively stable 40 percent. Whether the foreign aid has been devoted to public investment, consumption or tax deduction by Chinese government has never been studied. This paper tries to establish a group of simultaneous equations based on macroeconomic theories and empirical models and to answer the above questions using national and provincial data from 1978, respectively. Our econometric analysis indicates that loans from international financial institutions do have some fungibility, and the extent to which they perform in different regions is varying. However, the kind of fungibility has no negative impact on public and private investment.
