Research On The Risks And Preventive Systems Of China's Foreign Direct Investment

China's outward foreign direct investment has developed rapidly after the reform and opening up to the outside world. It has experienced four stages of development, which are the initial exploration, steady adjustment, rapid development and structural adjustment. With the implementation of the "The Belt and Road" initiative, China's outward foreign direct investment will usher in greater development. However, due to late launching of "go global" strategy by Chinese enterprises and lack of experience, China's outward foreign direct investment risk events occurred repeatedly. To this end, firstly, it is necessary to carry out study on risks of China's outward foreign direct investment and risk preventions. This dissertation will conduct qualitative researches on both risks and sources of risks faced by China's outward foreign direct investment; Secondly, it will conduct the case analysis in the realistic performance of risk response of China's enterprises; Thirdly, the investment gravity model will be used to study effects of the political risk and bilateral investment agreements on China's outward foreign direct investment; Finally, it will put forward specific policy recommendations based on the advanced experience of foreign risk prevention. The main contents are as follows:Introduction. It initially elaborates background of the selected topic and its significance, the present domestic and foreign related researches, the research ideas and methods of this paper, innovation and the deficiency as well.Main content. It carries out the study on the theoretical basis of risk prevention of outward foreign direct investment. This chapter firstly clarifies the concepts related to the risk of outward foreign direct investment, including concepts and connotations of risks and the risk prevention of the both foreign direct investment and outward foreign direct investment, and then consolidates mainstream investment risk theories and risk management and early warning theories at home and abroad.It continues to study the risk of China's outward foreign direct investment and its origin. Main risks faced by China's outward foreign direct investment are political risk, legal risk, economic risk, cultural risk, the political risk is the most important and decisive risk facing China's outward foreign direct investment. In addition, it highlights international merger and acquisition risks and new risks after the world financial crisis and other issues. And sources of risk result mainly from three levels, the internationally, the unbalanced development of economic globalization, the global financial crisis, the global industrial restructuring, etc.; from the government level, China's outward foreign direct investment legislation left behind, lack of overseas investment insurance system, weak practical effect of bilateral investment agreements; from the enterprise level, there exist its poor risk prevention awareness and ability, the lack of experience in overseas investment, highly concentrated investment fields.It analyzes the real performance of risk-countering by Chinese enterprises. Utilizing the case analysis method, this chapter carries out researches on three typical overseas investment risk and prevention by three companies, Chinalco, Sandy and Huawei. Researches show that outward foreign direct investments of Chinese enterprises have many challenges and difficulties, in addition to the political risk, legal risks, most important is that many more Chinese enterprises ignore social responsibility, environmental protection, local contents requirements. Therefore, Chinese enterprises who conduct outward foreign direct investment should follow the host country's laws and regulations, fulfill their social responsibility, and create a responsible and accountable environment.It uses the model to test the impact of political risk and bilateral investment agreements. Empirical findings show:first, the relationship between political risk index and China's outward foreign direct investment is not significant; the breakdown of the different kinds of political risk approve that China's outward foreign direct investment generally stay away from countries outside of the risk of conflict, and tend to enter the host country whose laws and order environment are poor. In view of this, in order to avoid the frequent occurrence of risk events, it is an urgent for Chinese enterprises of "go global" to strengthen risk prevention. Second, the impact of bilateral investment agreements on China's outward foreign direct investment is insignificant, the main reason may be that the quality of China's bilateral investment agreement is not high. To this end, China should sign off a higher level of bilateral investment agreements to promote and protect China's outward foreign direct investment.Conclusion. It studies the international protection experience of outward foreign capital investments. This chapter will study the United States, Japan and bilateral and multilateral agreements on the basis of comparisons on law of international investment. The main conclusions include:first, the purpose to formulate the laws by advanced countries emphasizes protection and incentive of outward foreign direct investment flowing to other countries; second, that may exist in the future risks on overseas investment, relevant measures is not only limited in the economic field, but also involved in political consultation and foreign policy; third, the establishment of overseas investment insurance system, insurance agencies generally are public authorities, insurance underwriting are primarily for political risk; fourth, bilateral investment agreement focuses on interests protection of foreign investors in order to compensate for the domestic legislation in extraterritorial effect problem.It also discusses the construction of risk prevention and protection system of China's outward foreign direct investment. The main policy suggestions include:first. to formulate the Outward Foreign Direct Investment Law as protecting the investor's interests as a core to guide, standardize enterprise overseas investment behavior; second, to construct foreign investment insurance system with clear coverage, qualified investments, and the establishment of the system of subrogation; third, to better standardize the contents of bilateral investment agreements with focus on industrial capacity cooperation; fourth, starting from investment environment, investment subject and legal risk, to improve the investment environment evaluation system; fifth, pay attention to the new investment risk, including labor standards, environmental standards, human rights standards.