Research On The Impact Of Political Risk On The Location Choice Of China’s Foreign Direct Investment

After 40 years of reform and opening up,China has gradually changed from a big country that attracts foreign investment to a big country that invests in foreign countries,and from a resource-based exporting country to a resource-based investing country.With the development of China’s foreign direct investment,the problems and risks faced by Chinese enterprises in the process of investment are exposed,especially the political risks.Traditional international investment theory holds that OFDI is more inclined to countries with better political systems and governance environment.However,many scholars have found that China’s existing foreign direct investment has a risk preference tendency,and this risk preference will be weakened under the influence of investment motivation.Based on this,this paper puts the factors of investment motivation into the impact of political risk on China’s OFDI,to investigate the political risk preference of China’s foreign investment and the role of investment motivation in venture capital.Based on the panel data of China’s direct investment in 107 countries from 2003 to 2016,this paper sets up two kinds of basic multiple linear regression models according to the empirical needs,and conducts GLS test for the selected data.The conclusions are as follows: First,during the research period selected in this paper,China’s OFDI does have a "political risk preference",that is,the higher the political risk of the host country,the more Chinese enterprises will increase their investment,but under the motivation of natural resources investment,this preference is weakened.That is,the natural resources and political risks of the host country play a complementary role.Second,compared with developed countries,in the process of investing in developing countries,the above-mentioned weakening effect is smaller than that in the sample of developed countries.Finally,the author suggests that the government should encourage,support and actively guide enterprises’ investment needs with different motives,and improve the protection mechanism of foreign investors.At the micro level,it is suggested that enterprises should improve the risk management response system,establish portfolio investment to disperse risks according to the actual situation,and reasonably meet the investment needs of foreign direct investment of local enterprises.