Research On Chinese Firms' OFDI Decision Making In Countries Along "The Belt And Road"

China has gradually participated in globalising since its policy reform starting in 1978.Although domestic companies faced less restriction,the actual development of Chinese enterprises' outward FDI started following the "Go Global" strategy implemented in 2000.More and more attention has been paid to the differences of outward FDI between emerging countries and developed countries.Based on this perspective,the outward FDI theory has been extended,with the emphasis on the significance of government policy in developing countries."The Belt and Road"initiative put forward in 2013 now drives China's outward FDI,while at the same time providing an opportunity to strengthen China's presence in the world.This initiative covers guidelines to trade and investment.This research considers Chinese firms' outward FDI under the framework of "The Belt and Road" initiative,not only extending the general theory of multinationals,but also highly relavant to policy makers.Considering "The Belt and Road" initiative as background,this paper analyses Chinese firms' outward FDI based on the perspective of differential investment motivations,which nests this initiative into the framework of Chinese outward FDI theory.Firstly,this paper analyses the facts of Chinese firms' OFDI to the "B&R"countries.Then,this paper builds game models to analyse the general equilibrium of Chinese firms' OFDI to the "B&R" countries.Thirdly,this paper set up a theoretical framework to analyse the differential investment motivations and Chinese firms'OFDI to the "B&R" countries,which includes mathematical models and mechanism analysis.Then,this paper estimates empirical models dealing with the motivation for outward FDI.Lastly,there is a summary,conclusion and research prospects.As background,this chapter starts by summarising the official data on China's outward FDI to the "B&R" countries not only on the country level,but also on the firm level.This chapter uses the world-wide company information in ORBIS to track the flow of outward FDI investment from Chinese enterprises,particularly any follow-on investment from tax haven subsidiaries,to remove(as far as possible)"round-tripping",which has been a major obstacle encountered by scholars and policy-makers.In terms of the general equilibrium of Chinese firms' OFDI to the "B&R" countries,this paper sets up a game model to prove that Chinese firms should choose outward FDI actively,especially involving with "The Belt and Road" initiative.During the process,this paper completes the general equilibrium model by relaxing hypothesis.Firstly,the paper builds a static game model of complete information under unbiased hypothesis.Secondly,this paper relaxes the unbiased hypothesis and sets up a game model of complete information under biased hypothesis including static and dynamic analysis.Than,a game model of incomplete information under biased hypothesis is structured by relaxing hypothesis of complete information.As assumptions are constantly relaxed,this game model can explain reality better.The result shows that Chinese firms should not only take the initiative to carry out OFDI,but also faster than their competitors in order to gain the first-move advantage.Considering the theoretical framework of differential investment motivations and Chinese firms' outward FDI to the "B&R" countries,this paper builds a mathematical model and mechanism analysis.The mathematical model includes down-gradient and up-gradient outward FDI to capture the difference between these two situations.The result shows that analyzing differential investment motivations can allow us to have a better understanding of Chinese firms' outward FDI,such as which firm chooses what type of outward FDI and its location choice.Then,to classify firms into six outward FDI sub-groups,this paper uses the World Input-Output Table(WIOT)according to the International Standard Industrial Classification.The country-by-country I-O matrices are aggregated into a single world table comprising the forward and backward linkages between sectors.Thus,this paper has the full I-O technological links between industries in terms of the use of intermediate and factor inputs and final demand.The paper then compares the industry classification of parents and subsidiaries involved in China's outward FDI and draw six outward FDI types:intra-industry promotion,expanding ind ustry supply-chains,portfolio diversification,professional/specialized business services-seeking,natural resource-seeking and tax-benefit seeking.Following this,the paper then models the underlying determinants of outward FDI,involving firm and home/host country characteristics.To identify these impacts,the paper follows the common approach adopted in other studies and tries to link these to certain underlying characteristics of the parent firms based in China,as well as those of the host country.Lastly,this paper focuses the down/up-gradient OFDI's differential preferences to investment motivations.Note,considering the drivers underlying investment motivations,there exists a difference in the same type outward FDI of down/up-gradient investment.Regarding the empirical analysis of differential investment motivations and Chinese firms' OFDI to the "B&R" countries,this paper discusses the data used and estimates empirical models dealing with the motivation for outward FDI involving "The Belt and Road" initiative.Here this paper uses the ORBIS database to locate both parents and foreign subsidiaries in 2017,then,multinomial logit/probit models are estimated to get the results.To capture any differences between firms' choice of the "B&R" host countries for the differential investment motivations of outward FDI,this paper compares the results and finds that there are no significant but only some subtle differences between whole/the "B&R" countries on three of the six sub-group motivations:intra-industry promotion,professional/specialized business services-seeking and natural resource-seeking.Most of these subtle differences show that "The Belt and Road" initiative strengthens the relevant facts with positive/negative effects.The other three-expanding industry supply-chains,portfolio diversification and tax benefit-seeking,have a few significant different factors.The enpirical tests also suggest that the decision of what motivation of outward FDI undertaken by a Chinese multinational firm is significantly influenced by whether the"B&R" host country is in the OECD or not,but less so when the choice is intra-industry promotion and/or natural resource-seeking.Overall,expanding industry supply-chains is mostly affected by firm-specific and host ccuntry-specific characteristics.Portfolio diversification is mostly affected by host country-specific characteristics,while professional/specialized business services-seeking is mostly affected by firm-specific characteristics.The results of tax benefit-seeking outward FDI of the whole sample is highly consistent with the empirical results of the down gradient investment,but there are no siginicant factors in the up-gradient investment.Based on the analysis,this paper can get the conclusion involving location choice.Lastly,this paper puts forth some policy suggestions to Chinese firms' outward FDI of the "B&R" countries based on the country level,the non-governmental organization level and the firm level perspectively.At the country level,suggestions include:building close relation to host countries,strengthening the information platforms related to outward FDI,and focusing the supervision of enterprises.At the non-governmental organization level,suggestions include:building close connections to other enterprises of the same industry through commerces,trade associations and other social organizations.At the firm level,suggestions include:strengthening the understanding of firms' own capabilities,making full use of information from government and other sources.Considering these,as well as firm-specific,host-specific characteristics and previous experiences,Chinese firms should make a decision of how to undertake outward FDI to the "B&R" countries.