The Study On Location Determinants Of China Energy Enterprises' Outward Foreign Direct Investments

With the rapid development of China's economy,the importance of national energy security has become increasingly prominent issue.The fact about China's original energy endowment is 'abundant in coal,insufficient in oil and gas',but the demand for oil and gas in the domestic industry has gradually increased in recent years.While the circumstance to improve air quality and reduce carbon emissions became an urgent matter that it is necessary to reduce the proportion of coal in the energy consumption structure.The gap between supply and demand of natural gas and petroleum has further expanded.Thus,China has become a country heavily dependent on the import of oil and gas and its oil imports dependence even exceeded 67%in 2016.One crucial approach to solve this energy shortage quandary is to encourage energy companies making overseas investment.According to CGIT data,between 2005 and 2017,the cumulative investment of Chinese outward energy investment projects with transaction value over $100 million has reached $356.5 billion,accounting for 47%of the total China OFDI.In 2013,the Belt and Road' national strategy initiate the new era,Chinese energy companies is facing new opportunities and challenges in overseas investment.The reduction and proper control of investment risks,the increase of investment scale and revenue,the improvement of investment quality are issues that energy companies need to deliberate about.Start with a broad inspection into China's energy security status quo,this paper points out the significance of China's energy companies' outward foreign direct investment in ensuring the security of China's energy supply.Based on Yeaple's(2009)heterogeneous transnational corporation FDI model,how energy companies' investment location choice is affected by different dimensions of institutional factors and economic factors of the host country is analyzed.With firm level data from Chinese Global Investment Tractor that records 327 China energy companies' overseas mergers and acquisitions and greenfield investment in 74 countries during 2005-2016,combine with the World Development Index and WorldwideGovernance Indicators from World Bank,the empirical study has been done to quantitatively analyzed the investment influencing factors of host countries.Results found that the oversea investment flow by Chinese energy companies is positively related to host countries'investment openness,host countries' natural and technological resource endowments.There exist negative correlations between Chinese energy companies' investment and RMB indirect quotation exchange rates.The geographical distance between China and host countries is not significantly related to investment,neither do the host country's per capita GDP.As for the variables related to the governance quality of host countries,investment is negatively related to Government Effectiveness,and Control of Corruption.No significantly relation with voice&accountability,political stability&lack of violence,regulatory quality,and rule of law indicators.In general,Chinese energy companies' foreign investment is mainly motivated by the pursuit of natural resources and prefer host countries with relatively low governance level,such investment location selection behavior may lead to greater investment risk.Based on the above analysis,this study gives some relevant energy policy suggestions for overseas investment of energy companies.