Abstract: Since CAFTA was formally established in 2008, the bilateral intra-industry trade between China and ASEAN has been developing rapidly, and has become an important force in promoting the economic development of Southeast Asian countries. Foreign direct investment is helpful to realize the transnational flow of production factors and the optimal allocation of resources, which is an efficient approach to further improve the intra-industry trade between China and ASEAN. It can be seen from the thesis that the panel data of the FDI stock has been used to empirically analyze the impact of FDI on the intra-industry trade between China and ASEAN in 2005-2014 years. The results show that: The impact of China’s direct investment in ASEAN shows heterogeneity in bilateral intra-industry trade, vertical intra-industry trade and horizontal intra-industry trade to different members of ASEAN; besides, the dynamic change of FDI can lead to mutual extrusion between vertical and horizontal intra-industry trade.

Key words: FDI, China and ASEAN, intra-industry trade, panel data