The Effect Of Bilateral Political Relations On China’s Foreign Direct Investment

With the rapid development of Chinese economy,more and more Chinese enterprises to carry out overseas investment activities.At the national "going out" strategy of supporting and promoting China’s OFDI showing a trend of rapid development.Maintenance and improvement of bilateral political relations were given a new meaning in the context of globalization.Correct understanding and analysis of influence of bilateral political relations on a country’s foreign direct investment,helping China’s foreign direct investment and accelerate the pace of China’s "going out".Based on the extensive literature study,based on literature research methods from the perspective of political relations,and the following three qualitative analysis quantitative analysis research methods,respectively,on the whole,sub-national and type in stages three dimensions,using GLS regression The model empirically studies the impact of bilateral politics on China’s foreign direct investment and proposes three hypotheses: Hypothesis 1.Good bilateral political relations have on China’s foreign direct investment is now promoting this role in promoting more pronounced in developing countries;Hypothesis 2.The political risk of the host country has a significant inhibitory effect on China’s foreign direct investment,and this inhibition is more obvious in developing countries.Hypothesis 3.Good political relations between China and the host country can reduce the adverse impact of China’s foreign direct investment,the impact of this adjustment on the effect more pronounced in developing countries.Through empirical research,it is found that: First,good bilateral political relations can effectively promote foreign direct investment of Chinese enterprises,and can reduce the adverse impact of political risks on China’s foreign direct investment to a certain extent.Second,the host country’s political risk has a significant negative impact on China’s overall OFDI.Third,bilateral political relations and the political risks of host countries have significant national differences in their impact on China’s foreign direct investment.Good bilateral political relations have a more significant effect on the promotion of OFDI in developing countries than in developed countries.The politicalrisk of the host country has not had a significant negative impact on China’s direct investment in developed countries,but has a significant negative impact on China’s direct investment in developing countries.Fourth,after the 2008 financial crisis,bilateral political relations have enhanced the regulatory role of East Avenue countries’ political risks,which has weakened the host country’s political risk on China’s OFDI.In summary,the government should actively establish and maintain good political relations with countries that invest in destinations,and actively build risk early warning mechanisms.Enterprises should make full use of the promotion of such a good political relationship,and raise awareness of risk prevention to jointly promote the development of China’s foreign direct investment.