The Influence Of Foreign Relations On China’s OFDI

The Regional Comprehensive Economic Partnership(RCEP)is an eight-year agreement initiated by ASEAN in 2012 and comprising 15 members including China,Japan,South Korea,Australia,New Zealand and 10 ASEAN countries.At present,the global situation is unpredictable,and the signing of RCEP is an important step for China to actively respond to changes in the global situation and exaggerate opening up.At present,China’s outward direct investment in RCEP member countries has exceeded that of outward direct investment to the EU,which shows that RCEP is an important platform for China to adhere to the "going out" strategy and achieve a higher level of opening up.At the same time,diplomatic relations between China and other RCEP members are also constantly developing.In recent years,nationalism and protectionism have prevailed,along with the rise of the wave of anti-globalization and the occurrence of large-scale public health incidents,in such a severe international situation,the close and friendly diplomatic relations between China and other RCEP members are a strong signal to the world-oppose unilateralism and trade protectionism,safeguard the multilateral trading system and free trade,diplomatic relations have been given deeper connotation and significance.Therefore,based on RCEP,it is of urgent practical significance to study the impact of diplomatic relations and China’s outward foreign direct investment.Based on the perspective of diplomatic relations,this paper examines the effect of China’s outward direct investment in other RCEP members.Firstly,this paper reads domestic and foreign literature,and summarizes the economic impact of RCEP,the regulating role of OFDI and bilateral diplomatic relations on FDI,and provides a theoretical basis for subsequent theoretical analysis and empirical analysis.Secondly,it analyzes the current situation of China’s direct investment in other RCEP members and the current situation of diplomatic relations with other RCEP countries,and summarizes the relevant characteristics.Next,the mechanism of influence of bilateral diplomatic relations on direct investment is carefully analyzed.And finally,from the empirical analysis side,using data on China’s direct investment in other RCEP member countries from 2005 to 2020,analyze how diplomatic relations affect OFDI.Through literature research,current situation analysis,theoretical analysis and empirical analysis,the following conclusions are drawn: First,the role of friendly diplomatic relations in promoting China’s direct investment in other RCEP members is real.Second,diplomatic relations do affect China’s direct investment in other RCEP members by the conclusion of bilateral investment treaties,and under the regulating effect of bilateral investment treaties,the role of diplomatic relations on investment stock will increase with bilateral investment treaties.Third,compared with sister cities,the time of establishment of diplomatic relations has a better impact on investment stock,and high-level mutual visits and partnerships have a secondary impact on outward direct investment stock.Fourth,diplomatic relations have a better impact on the promotion of investment stocks in developed countries than those of developing countries.Based on the research conclusions,relatively feasible policy opinions are given:(1)We must continue to pursue the "Five Principles of Peaceful Coexistence",strengthen friendly relations with neighboring countries,promote economic and trade cooperation between countries,and lay a solid political foundation for trade and investment exchanges between countries.(2)Make full use of and give full play to the favorable conditions and advantages of economic diplomacy.(3)Deepen the relationship between sister cities(4)Continue to promote and deepen the upgrading of partnership.(5)For enterprises with cross-border investment,when RCEP member countries expand the scale of investment and select investment locations,they should pay attention to the friendly relations between the host country and China,and invest on the basis of good diplomatic relations with China.