The Influence Of Bilateral Friendly Diplomatic Relations On China’s Foreign Direct Investment

Under the current international situation,the “the Belt and Road” initiative is an important strategic deployment made by China to actively respond to the profound changes in the global situation and to coordinate the domestic and international situations.Since General Secretary Xi Jinping put forward the “the Belt and Road”initiative,the cooperation between China and the countries along the “the Belt and Road”has been continuously enhanced.The investment fields have become increasingly broad and the stock of direct investment to the countries along the route has also been increasing.At the same time,China’s diplomatic relations with the countries along “the Belt and Road” are constantly developing,injecting new impetus into multilateralism and economic globalization.Under the new situation such as the rise of antiglobalization tide,the rise of trade protectionism and large-scale public health events,bilateral diplomatic relations have been endowed with new connotations and significance.Therefore,it is of urgent practical significance to study the influence of bilateral friendly diplomatic relations on China’s foreign direct investment.Based on the perspective of bilateral friendly diplomatic relations,this paper studies the effect of China’s foreign direct investment in countries along “the Belt and Road”.First of all,this paper summarizes the relevant literature on the effect of “the Belt and Road” initiative,foreign direct investment and the regulatory role of bilateral diplomatic relations on direct investment,which provides a theoretical basis for subsequent theoretical analysis and empirical analysis.Secondly,it analyzes the current situation of China’s direct investment and diplomatic relations with countries along “the Belt and Road”,and summarizes the relevant characteristics.Then,in the aspect of theoretical analysis,the theoretical model of bilateral friendly diplomatic relations and foreign direct investment is established,and the influence mechanism of bilateral friendly diplomatic relations on foreign direct investment is analyzed.Finally,in the aspect of empirical analysis,using the data of China’s direct investment in countries along “the Belt and Road”,from 2010 to 2018,based on the panel quantile model,this paper analyzes how bilateral friendly diplomatic relations affect foreign direct investment.In addition,in order to investigate whether the bilateral friendly diplomatic relations can make up for the shortage of the host country’s market share,this paper introduces the interactive terms between the bilateral friendly diplomatic relations and the host country’s market share,and further analyzes the effect of “the Belt and Road”initiative by using the double difference method.Through literature research,current situation analysis,theoretical analysis and empirical analysis,the following conclusions are drawn:(1)There is a positive correlation between bilateral friendly diplomatic relations and foreign direct investment;(2)The implementation of “the Belt and Road” initiative has a positive effect on China’s foreign direct investment;(3)Bilateral friendly diplomatic relations can make up for the lack of market share of the host country to a certain extent in the short term.Finally,from the perspective of bilateral friendly diplomatic relations,this paper puts forward relevant policy suggestions on foreign direct investment:(1)strengthening the construction of bilateral friendly relations and building a mutually beneficial and winwin situation;(2)Actively carry out foreign aid to demonstrate the responsibility of big countries;(3)Deepen the strategic deployment of “the Belt and Road” initiative and create a good business environment.