The Influence Of Bilateral Investment Treaty On China’s OFDI ——Based On The Perspective Of Institution

Since China put forward the “going global” strategy in 2001,the scale of China’s outward foreign direct investment（OFDI）has been increasing,and it has changed from a “big investment country” in the early days of reform and opening-up to the “big country attracting capital” and “big country investing”.According to the statistics of the past two years,China’s OFDI flow has ranked the top three in the world for two consecutive years from 2017 to 2018,with huge investment potential.At present,China plays an important role in the global OFDI economy.However,as a large country of OFDI,more than 80% of China’s OFDI flows to the host country with a low level of institutional environment.This fact makes the protection of the interests of overseas investment enterprises an important issue that needs urgent attention.The bilateral investment treaty（BIT）is a legal tool for protecting and promoting investment between contracting states.The practice of BIT in China has a history of nearly 40 years,and has undergone a change from “none to nothing” and “from the main purpose of introducing foreign investment to the main purpose of promoting foreign investment”.In theory,by signing a BIT,the host country will have an inherent incentive to provide a stable,transparent and predictable investment environment for investors in the home country,which will help promote the home country’s OFDI activities.In view of this,this paper focuses on the protection and promotion of BIT on China’s OFDI and its mechanism,and makes relevant tests.Specifically speaking,at the theoretical level,this paper expounds the mechanism of institutional factors（institutional level and institutional distance）on China’s OFDI,and further discusses the direct and indirect promotion of BIT on China’s OFDI.At the empirical level,this paper selects 179 sample countries to conduct empirical tests on the theoretical mechanism.This paper mainly draws the following conclusions:Firstly,as a legal tool to protect and promote investment activities,BIT’s internal functions directly promote OFDI activities.Taking China’s effective BIT as an example,the practice of BIT at home and abroad has proved this conclusion from the perspective of experience.Secondly,BIT can make up for the lack of host country’s systems,the substitution effect（effective BIT can replace the lack of the host country’s system,thereby providing investment protection for Chinese “going global” enterprises）indirectly promoted the scale of OFDI in China,but this indirect effect will vary depending on the host country’s system.Specifically,for host countries with a low level of institutional environment,BIT has a greater substitution effect on the system,and further,it has a greater promotion effect on China’s OFDI;on the contrary,for developed countries,the promotion effect of BIT is smaller.Thirdly,from the perspective of the bilateral institutional distance between the host country and China,BIT can also indirectly promote the scale of OFDI by weakening the bilateral institutional distance.Specifically,China tends to invest in the host country with similar institutional.For host countries with large institutional gap with China,effective BIT can weaken the inhibitory effect of institutional distance on China’s OFDI,thereby promoting the inflow of China’s OFDI.