Beijing has attracted much foreign direct investment(FDI) since adopting the economic reform and open-door policy,and become one of the cities that attracted most foreign investment.Using a panel dataset of the manufacturing industry from 2001 to 2004 in Beijing,we make an empirical study on the spillover effects of FDI and find that crowding out effects of FDI are more significant than spillover effects on domestic enterprises as a whole,while FDI shows significant positive spillover effects on state-owned enterprises.In addition,the technology gap between foreign enterprises and domestic enterprises may have facilitated spillover effects in Beijing.The result suggests that the utilization of foreign investment maybe a double-edged sword for local economic development,and decision-makers should pay more attention to keep away its risk while wake up to its positive affects.