Political Risk,investor Protection And China’s OFDI Choice

With the rapid development of China’s economy,Chinese enterprise "going out" strategy with remarkable results,China’s OFDI achieved unprecedented development.but at the same time,also faces political risk such as government instability,poor investment environment,corruption,and lack of law.Thus,how the different factors of political risk will affect China’s OFDI has become a hot topic of academic circles.In addition,in order to deal with these problems and threats faced by China’s OFDI,protect citizens’ rights and interests of investment within the territory of the other party,the government often through the sign BIT,provide protection for domestic investors.Worthy of our in-depth study,however,is the sign of bilateral investment treaties to what extent will protect our country’s foreign investment?The bilateral investment treaties in the face of different types of political risk will produce what effect?Moreover,what is the relationship between the bilateral investment treaties and the protection of unilateral investors in providing risk protection to investors?Based on the 2005-2014 OFDI penal data from 68 representative counties along the road,the paper analyzes the political risk factors which affect China’s OFDI location choice from four different angels including the stability of host government,investment environment,corruption control and legal environment.In addition,it also examines the function of the intensity of the host country investor protection and the bilateral investment treaties signed with China in against and dissolving the investment risk,and protecting China’s overseas investment.The results show that the overseas investment of Chinese enterprises is dominated by political risk aversion.In particular,China’s OFDI is less concerned with corruption control in the other country,more concerned with stability and investment environment in host countries,and tends to avoid countries with a strict legal system.In addition,host country investor protection is also a decisive factor in China’s OFDI and has different interactions with host country’s heterogeneity of political risk under different conditions.The China market scale presents a significant positive effect to OFDI,but the host country market scale,cost of distance and tax burden level all present a significant negative effect.Finally,in view of the above research,the conclusion puts forward the corresponding policy recommendations.