The Characteristics And Risks Of China's Foreign Energy Investment

Based on the database of Chinese energy companies overseas investment from 2003 to 2015,this paper analyzes the characteristics and risks of investment from three aspects: total volume,industrial structure,and regional structure.As a whole,the scale of China's energy ODI has first risen and then declined.And the ratio of energy investment to total direct investment is declining.The most popular Chinese energy ODI mode is M&A for the last 15 years,but the proportion of Greenfield investment has increased rapidly in the past two years.In terms of industrial structure,the subject of Chinese energy ODI has transited from fossil energy to electricity investment;and new energy is a new direction for Greenfield investment.From the perspective of investment regional layout,Chinese energy Greenfield investment is concentrated in Asian developing countries,while M&A are more dispersed.In recent years,the risk of Chinese energy ODI is slightly higher than other industries,especially in West Asia,southern Africa,and North America.In addition,investment risks in natural gas and hydropower need more attention.Based on gravitational model,panel probit and tobit model,this paper conducts empirical research on the energy ODI behavior of Chinese companies.The main conclusions are as follows: First,the political and social risks of host country,especially the risk of corruption,will inhibit the foreign investment of Chinese energy companies,especially on overseas mergers and acquisitions.Moreover,the impact of risk on the investment selection equation is more significant than on the investment scale equation.The bilateral political relationship will promote Chinese energy foreign investment from two aspects: the establishment of diplomatic relations will promote Chinese foreign energy companies to invest overseas,and the signing of BIT will make the company's investment decision-making behavior more risky,especially for internal conflicts,government effectiveness,and legal risks of host country.In energy-rich countries,Chinese energy companies' ODI is more risk-averse than the relatively energy-poor countries.Second,both GDP and resource endowments are significantly positively related to energy investment.As a whole,overseas investments by Chinese energy companies are both market-seeking and resource-seeking,and they are more likely to be market-seeking Specifically,China's energy Greenfield investment is mainly market-oriented,while overseas M&A are resource-seeking;in addition,Chinese foreign power investment is market-seeking,while fossil energy investment is mainly resource-seeking,and complementary market-seeking.Finally,geographical distance factors will inhibit Greenfield investment and electricity investment,but have no significant impact on M&A and fossil energy investment;and common language factors and the investment experience in a country of last year will promote all types of Chinese energy investment decisions.The end of this paper is several policy recommendations: When investing abroad,Chinese energy companies need to guard against regional investment risks,optimize the industrial structure of energy investment,and increase corporate social responsibility awareness.The government can promote BITs and foreign investment management mechanisms to facilitate the investment of China's energy companies.