Abstract:In the process of global industrial adjustment, the structure of Foreign Direct Investment (FDI) has shifted towards services. The degree of openness of service industry has been greatly improved since China's opening up to the outside world. As a result, FDI in services has grown substantially. It can be expected that China's service industry will become the most attractive field to foreign capital. In this paper, the status, problems and determinants of FDI in China's service industry are analyzed. Compared with the world growth trend of services FDI and its changing mix, the stock of China's services FDI is rather small and the sector distribution is uneven: the proportions of finance, trade and fundamental service sectors are very small, while FDI in real estate, leasing and business services account for very large share. Services FDI in China shows strong locational preference, while the sector distribution in provinces or cities does not have much difference, mostly concentrating in such service sectors as real estate and social services. Services FDI in China are positively influenced by the degree of openness and market scale. However, there aren't appreciable relationships between services FDI and the infrastructure, development level of service industry and human capital. It conducts empirical analyses on the relationship between services FDI and the value-added, labor productivity of China's service industry. It shows that the positive relationship between services FDI and the development of China's service industry is not evident. There exists a positive correlation between services FDI and labor productivity of China's service industry, but this effect has a time lag. Some countermeasures are put forward accordingly.