Study On The Impact Of Chinese OFDI On Capital Factor Market Distortions

With the implementation of the "Go Global" and "One Belt,One Road" initiative,China’s outward foreign direct investment(OFDI)has grown rapidly.By the end of 2021,China’s OFDI flow reached US$178.82 billion,ranking among the top three in the world for10 consecutive years;China’s OFDI stock reached US$2.79 trillion,ranking among the top three in the world for five consecutive years.In the face of the rapid development of China’s OFDI,the impact of OFDI on domestic economic development is a hot issue.In addition,after more than four decades of rapid growth,the growth rate of China’s economy is slowing down in the crude economic growth model,with the average annual GDP growth rate dropping from around 10% previously to around 7%,and even to 2.8% in 2022.As a result,how to optimise the traditional economic growth model has become a question worth exploring in current economic research.Previous studies have shown that distortions in capital factor markets can bring about a loss of economic efficiency.Therefore,based on the dual background of the rapid development of outward foreign direct investment and the existence of distortions in the capital factor market in China,this paper incorporates outward foreign direct investment and capital factor market distortions into a unified research framework,allowing capital factors to flow between different countries and different regions within the country,thus realising the cross-country and cross-regional optimal allocation of resources,and through theoretical analysis and empirical research,explores the impact of outward foreign direct investment on Through theoretical analysis and empirical research,we explore the impact of OFDI on the distortion of capital factors markets in China.This paper first analyses the current situation of OFDI in China and measures the distortions in China’s capital factors market.It is found that: China’s OFDI has developed rapidly,its volume has continued to expand,and it has begun to pay attention to the improvement of investment quality and the optimisation of investment structure,and is now in a stable development stage.In terms of provincial distribution differences,capital factor market distortions are common in all provinces in China,but the allocation of capital factors is more clearly differentiated and uneven among provincial regions.Secondly,using panel data of 30 Chinese provinces(excluding Tibet and Hong Kong,Macao and Taiwan)from 2011 to 2020,we firstly measured the direct impact of OFDI on capital factor market distortions in each province and its spatial heterogeneity by constructing a fixed-effects model.The second is to verify the masking effect of technological innovation efficiency in the impact of OFDI on capital factor markets by means of a mediating effect model.The empirical results show that Chinese OFDI can significantly improve the overall capital factor market distortions in China.In terms of regional differences,the impact effect is significant in the western region,but not in the eastern and central regions,and there is some variability in the impact of other control variables on capital factor market distortions in the east,central and western regions.Among them: technological innovation efficiency has a masking effect in the effect of OFDI on capital factor market distortions.An appropriate spatial econometric model was further selected to measure the spatial spillover effects of OFDI on capital factor market distortions across Chinese provinces.The results show that both the capital market distortion index and the stock of OFDI in each Chinese province show positive spatial autocorrelation.The spatial Durbin model decomposes to obtain the direct,indirect and total effects of OFDI stock,where the indirect effect is larger than the direct effect,indicating that the effect of OFDI on capital factor market distortions is mainly achieved through the spatial spillover effect.Finally,based on the above research,this paper puts forward policy recommendations in three aspects: in-depth implementation of enterprises’ "going out" strategy,multi-dimensional broadening of enterprises’ OFDI channels,and provision of multiple guarantees for enterprises’ OFDI.