The Impact Of China’s Economic Policy Uncertainty On Chinese Enterprises’ Outward Foreign Direct Investment

In recent years,the Chinese economy has begun to shift from quantity to quality.In order to achieve this goal and improve the competitive advantage of China’s products,the economic structure must be optimized.However,the current global situation is complex and volatile,experiencing "unprecedented changes in a century",all of which will bring about significant macroeconomic fluctuations.At the same time,the outbreak and continued spread of COVID-19 in 2020 has inhibited the production and operation activities of enterprises,bringing challenges to survival and development.The global economy has also been hit hard,with economic growth facing continued and increasing pressure.In terms of the domestic economy,data released by the National Bureau of Statistics for the first quarter of 2020 showed a historically rare negative growth in gross domestic product,down 6.8%year-over-year.International markets have been similarly affected.The rapid spread and intensification of the global epidemic forced governments to step up their preventive measures and adopt a series of measures such as city closures and quarantines to control the epidemic,but this led to a worldwide economic shutdown.Against this backdrop,financial and futures markets also suffered,with U.S.stocks experiencing a historic four meltdowns in less than a month and oil prices suffering a plunge,trading even below zero value.Calls for counter-globalization,trade protectionism and the return of manufacturing are also growing.To mitigate the impact of economic volatility on society,the government has adopted a series of economic policies,including fiscal and monetary policies,with a view to smoothing out economic fluctuations.This reflects the Administration’s efforts to cope with economic pressures,as well as its responsibilities and obligations to society and the economy.However,the sudden and exogenous nature of macroeconomic fluctuations also means that the government faces a certain degree of uncertainty in implementing economic policies.For enterprises,foreign investment is an important economic behavior decision that is inevitably subject to internal and external macro and micro environmental factors.Therefore,changes in economic uncertainty will have a profound impact on enterprises’ foreign direct investment decisions.The factors that enterprises need to consider include but not limited to policy risk,market risk,exchange rate risk,credit risk,etc.In addition,enterprises need to make reasonable investment plans based on their own financial status,market positioning,industry competition and other factors.Therefore,enterprises need to develop reasonable investment strategies against the background of changing economic uncertainties in order to minimize risks and ensure their long-term development.In this study,through theoretical analysis,an unbalanced panel data of A-share listed concept stocks in China’s e-commerce industry from 2012-2021 and the Chinese economic policy uncertainty index constructed by Baker et al.(2016)are used to establish a fixed-effects model to empirically study corporate outward investment.At the same time,a heterogeneity test was conducted to comparatively analyze the differences in the impact of Chinese economic policy uncertainty on Chinese e-commerce firms’ foreign direct investment,taking into account different firm characteristics,from the perspectives of ownership nature,firm establishment time and access to government subsidies.The main findings are as follows: first,there is a significant negative relationship between economic policy uncertainty and firms’ outward investment,i.e.,economic policy uncertainty inhibits firms’ foreign direct investment;second,firms with high gearing are more conservative in the face of economic policy uncertainty,while firms with high digital technology adoption are more aggressive;third,due to the nature of firm ownership,firm establishment time,and receipt of government subsidies The impact of China’s economic policy uncertainty on Chinese e-commerce firms’ foreign direct investment also varies due to the nature of firm ownership,firm establishment time and access to government subsidies.