Fiscal-Taxation Support For China's Outward Foreign Direct Investment In The Context Of The Belt And Road Initiative

With the deep integration of the global economy,China participates in international division of labor by foreign trade,FDI and OFDI.The construction of "The Belt and Road"(B?R)brings great opportunities for China's Outward Foreign Direct Investment.Countries and regions along B?R have broad investment prospects since they do not only have huge market potential,but also are highly complementary with China in economies.However,most countries along B?R are developing countries,which are large different from the developed countries.This paper studied the economic effects of Chinese enterprises' investment in countries along B?R,and the mechanism of existing fiscal and tax policies,providing theoretical basis for relevant policy-making.The paper describes the whole features of Chinese enterprises' investment in countries along the B?R route,and compares the differences between the B?R markets and the mature markets like US and Europe.It is proposed that B?R is the expansion of China's traditional overseas investment area,which is mutually complementary with developed markets.B?R countries have huge investment potential,but also face more serious market failure.Then,starting from the enterprise life cycle theory,the paper focuses on the economic effect of enterprises in the countries along B?R by downstream OFDI.Then,based on the characteristics of the B?R countries,using the enterprise life cycle theory and F-H model,the economic effect caused by the gradient OFDI in the countries along the B?R route is emphatically studied.Through the analysis of TFP(Total Factor Productivity)and major financial indicators of enterprises,it is found that enterprises can improve the efficiency by OFDI,and the development of the B?R can also enhance this positive effect.However,it is a long-term process and still faces many constraints.Therefore,the policy dividend is released gradually in the long term,and the financial indicators of enterprises do not improve significantly in the short term.After analyzing the rationality and necessity of the government providing fiscal and tax support for Chinese enterprises to enter the B?R markets,the impact of Bilateral Tax Treaties on Chinese ofdi enterprises is studied,combined with China's current tax policies.Empirical analysis is made of the data of China's A-share and NEEQ companies from 2005 to 2016.Then the paper also studied the influence of fiscal support policy on enterprise internationalization.In the process of empirical analysis,the subsidy data of Chinese enterprises was re-builded and we use instrumental variable method and PSM to reduce the endogenous interference of fiscal subsidy.Through the above research,we find that:(1)B?R construction provides greater space and institutional guarantee for Chinese enterprises to internationalize,but the economic effects of OFDI is still not significant,and there is still a large space for fiscal and tax support.(2)Tax treaties are heterogeneous for host countries which have different levels of tax burden and institutional quality.Tax treaties could alleviate the negative impact of high tax burdens and poor institutional quality in host countries,but have no obvious impact on host countries with low tax burden and high institutional quality.The breadth of the host country's tax treaty network has a positive effect on the entry of Chinese enterprises,and the tax treaty network can replace the shortage of the host country's poor institutional quality.The impact of tax treaties has no significant difference between enterprises of different ownerships which participate in "The Belt and Road Initiative".(3)Government subsidies have a significant positive incentive to improve the internationalization level of enterprises,and the current subsidies for enterprise internationalization are still in a moderate range.Subsidies can improve the level of enterprise internationalization by reducing the inhibiting effect of financial constraints on enterprise internationalization.Based on the analysis of the policy effects of tax treaties and financial subsidies,this paper puts forward some suggestions for improving the fiscal and tax policies of enterprises' foreign direct investment under the background of B?R.