The Study Of Location Choices On China’s OFDI In Countries Along“The Belt And Road”

As China’s deep integration into global economy,Outward Foreign Direct Investment(OFDI)begins to enter the golden era for growth,especially for the OFDI to “The Belt and Road”(B&R)which brings great opportunities.The countries and regions along B&R are highly complementary with China’s economy,not only have a larger market size,but also have a broad investment prospect and profound development space.So in the critical period of B&R construction being gradually implemented,it is urgent and important to study the best choices of China’s OFDI and analyze the factors influencing location choices on China’s OFDI in countries along B&R.This study could make up for the lack of academic research in this area and provide scientific and proper countermeasures for the location choices on China’s OFDI in countries along B&R.Based on the directory of China’s OFDI from the Ministry of Commerce and Chinese Industrial Enterprises Database,this thesis examines the issue of the location choices of China’s OFDI in countries along B&R from micro-level of country and micro-level of enterprise.Firstly,this paper reviews the related theory and empirical literatures about the location choices and China’s OFDI in countries along B&R,analyzing the development stage,the risks and regional distribution characteristics of China’s OFDI in countries along B&R,constructing the theoretical model of location choices on China’s OFDI.Secondly,the thesis examines the location choices on China’s OFDI in countries along B&R at national level,and the empirical results show that both Bilateral Investment Treaty(BIT)and the characteristic factors of the host country have important effects on the location choices on China’s OFDI in countries along B&R.,BIT could also adjusted the effects of B&R of host country’s characteristic factors at B&R.(1)BIT could reduce the risks and possible losses of China’s OFDI in countries along B&R.So it plays an important role in promoting China’s enterprise to invest in signatory country.(2)The benign governance of the host country could create stable business environment for foreign investor,which has significant positive effect for attracting China’s enterprises to invest in countries along B&R.(3)The political environment is an important factor to attract foreign investment for B&R’s host country and the good political environment also has significant positive effect for attracting China’s enterprise to invest in countries along B&R.(4)The infrastructureof B&R’s host countrieshave significant negative effect inattracting Chinese enterprises,which probably due to the infrastructure in most countries along B&R is weak.So these countries has relatively broad infrastructure construction market and demand space which provide a good opportunity for china’s enterprises.(5)The natural resource of B&R’s host country also has significant negative effect on Chinese firms’ desicions,which may be caused by restricted naturalresource openess degree or“resource curse” in those B&R host countrieswith better naturalresource endowment.And excluding the above two factors,we still support the view that the better naturalresource will be of more attraction to China’OFDI.(6)according to Interactive term,we got the following conclusions:(1)The BIT weakens promotion effect caused by governance’s improvement for attracting China’OFDI in countries along B&R.(2)The BIT can not effectively adjust the effect caused by political environment for China’s OFDI in countries along B&R.(3)The signing of BIT strengthens the huge infrastructure demand market in the B&R’s host country,which promotes the direct investment of Chinese enterprises in the country.(4)BITs have strengthened the attractiveness of abundant natural resources for resource-seeking enterprises’ OFDI in countries along B&R.Thirdly,the thesis examines the location choices on China’s OFDI in countries along B&R on firm level.Results show that the characters of enterprises(productivity heterogeneity and ownership heterogeneity)not only have different effects on the location choices of China’s OFDI between B&R and Non-B&R,but also play different roles for the location choices on China’s OFDI among B&R’s different regions.(1)Highly productive Chinese firms don’t significantly increase their OFDI in countries that along B&R.Instead,more productive firms invest more to Non-B&R’s countries and two types of countries.(2)Firms with closer government connections have higher probability to invest in countries along B&R or conduct investment to both types of countries.But this effect loses significance of only investing in NonB&R’s countries.(3)For state owned enterprises,firms with low productivity have a higher probability to invest in countries along B&R.But for private firms,only highly productive firms are more likely to invest in countries along B&R.(4)This thesis also examined the OFDI pattern within Belt and Road counties,and we find that:(1)Highly productive firms have more probability to invest in ASEAN,Central Asia and Commonwealth of Independent States,but this effect loses its significance for firms investing in west Asia,south Asia and east and central Europe.(2)Firms with closergovernment connections have more probability to invest in west Asia,north Africa,south Asia and Commonwealth of Independent States,and firms without closer government connections have a higher probability to invest in Central Asia.(3)The degree of proximity to government relations has little impact on Chinese enterprises’ investment in ASEAN and Central and Eastern Europe.Finally,this paper summarizes the findings and puts forward the corresponding policy implications:(1)Pay attention to signing high standard BIT and perfecting relevant provisions.(2)Perfect political risks prevention and guarantee mechanism to make up for the lack of BIT’s function for China’s OFDI in countries along B&R.(3)Accelerate the infrastructure connectivity construction between china and countries along B&R.(4)Accelerate the diverse direct investment to “resource curse” countries along B&R to promote the variety of local industry.(5)Improve the total factor productivity of enterprises that invest in the countries along B&R.(6)Speed up private enterprises’ OFDI in countries along B&R.(7)Promote location distribution equalization of investment in the countries along B&R.