Research On The Impact Of Host Country Risks On China’s Project Investment Along The Belt And Road

Since the official launch of the "Belt and Road" initiative in October 2013,with the Chinese government’s support,the participation of countries along the route,and the support of various organizations,project construction and cooperation have yielded fruitful results.The "Belt and Road" initiative creates a brand-new platform for the world’s common development,as well as an opportunity for China to continue to deepen its reform and open up to the outside world.As a result,Chinese firms now have a larger international market space.In recent years,Chinese enterprises’ investment in countries along the "Belt and Road"has steadily increased year after year,and a number of representative major projects have been gradually implemented.With the continued advancement of the "Belt and Road"construction,China will continue to increase project investment in countries along the route in the future.While the "Belt and Road" project has made significant progress,new challenges and risks are emerging.Some countries along the "Belt and Road" have a volatile political situation,significant religious contradictions,and an unstable social environment.Because of their abundant natural resources and prominent geographical risks,the Middle East,West Asia,and other regions have become strategic locations contested by Western countries over the years.Countries along the "Belt and Road" have varying levels of economic development,diverse national cultures,and complex and volatile investment environments.In recent years,projects invested in by Chinese enterprises in countries along the route have frequently been blocked and failed due to the host country’s complex and changing investment environment,resulting in massive losses for Chinese enterprises.As a result of the unstable investment environment of the countries along the "Belt and Road,"Chinese enterprises’ project investment in the countries along the route will face challenges and threats,and the risk of the host country has become an important factor affecting the construction of the "Belt and Road."As a result,how to accurately and comprehensively identify and measure the risks of the host country,research how to avoid and resolve the adverse effects of the host country’s risks on Chinese enterprises’ project investment in countries along the route to the greatest extent possible,and research how to effectively prevent project risks,so as to ensure the smooth implementation of China’s project investment in countries along the route,and realize the transformation of project investmentBased on this,the following research questions are proposed in this dissertation:First,how can the risk of the host country be identified and measured comprehensively and accurately?Second,what is the mechanism by which host country risk affects China’s project investment in countries along the "Belt and Road" initiative?Do various types of risks in the host country have an impact on the flow of Chinese project investment in countries along the route?What is the reason for this?Do various types of risks in the host country have a significant impact on the investment effect of the "Belt and Road" project?Is there variation in different scenarios?Is there a mechanism for adjusting?If this is the case,what is the mechanism of action?Third,how can the "Belt and Road" project’s investment success rate be increased while also reducing project risks by effectively mitigating the host country’s risks?Based on the research questions listed above,this dissertation takes the technical route of "asking questions," "analyzing questions," and "solving problems." The following are the main research findings and accomplishments of this dissertation:To begin,this dissertation theoretically analyzes the negative and positive influence and mechanism of host country risk on China’s "Belt and Road" project investment,as well as the regulatory effect and mechanism of the "Belt and Road" initiative and bilateral investment,by combing the existing literature and expounding the related theories of foreign direct investment,from the perspective of China’s investment flow and effectiveness in the countries along the "Belt and Road."Second,using the theory of national risk,the political,economic,social,and comprehensive risk values of 38 countries along the "Belt and Road" from 2005 to 2019 were calculated and evaluated by building a national risk measurement index system with 24 specific indicators in three dimensions of politics,economy,and society,and weighting and calculating the indicators using the entropy method.The findings show that,during the study period,the political risks in the sample countries along the "Belt and Road" are relatively high in West Asia and South Asia,while they are relatively low in Central and Eastern Europe.In addition to the high economic risks in West Asia and the CIS countries,social risks and the overall risk value are generally high,with most countries at a higher risk level.Third,using the econometric model,the following contents are empirically analyzed based on the characteristic facts and action mechanism:First,the impact of various risk dimensions in the host country on the investment flow of China’s "Belt and Road" project is empirically tested,and the "risk preference "characteristics of project investment are empirically analyzed.Second,empirically test the impact of various risk dimensions in the host country on the investment effect of China’s "Belt and Road" project,and further test the moderating effect of the "Belt and Road" initiative and bilateral investment agreements on their relationship.The empirical results show that during the research period,China’s project investment in the countries along the "Belt and Road "mainly flowed into countries with higher risks,which had the characteristics of "risk preference," but behind the "risk preference "was the balance of the host country’s special location advantage,the enterprise’s own specific advantage,the country’s specific advantage,and risk tolerance.During the research period,the majority of China’s failed investment projects along the "Belt and Road"occurred in high-risk countries.The host country’s comprehensive and political risks significantly increased the probability and scale of project investment failure,whereas the host country’s economic and social risks did not significantly increase the probability and scale of project investment failure.The impact of various dimensions of risk in the host country on the investment effect of the "Belt and Road" project demonstrates heterogeneity due to different industries and investors;The "Belt and Road" initiative and bilateral investment agreements have a significant moderating effect on the relationship between various dimensions of risk in the host country and the investment results of the "Belt and Road" project.The "Belt and Road" initiative reduces the positive impact of the host country’s comprehensive risks and political risks on project investment failure,whereas bilateral investment agreements reduce the positive impact of the host country’s comprehensive risks and political risks on project investment failure and increase the negative impact of the host country’s economic risks on project investment failure.Fourth,the risk formation framework of the "Belt and Road" project is built on the theory of risk transmission and vulnerability.Based on this framework,a risk formation analysis of failed projects in countries along the "Belt and Road" from 2005 to 2019 is conducted using text mining,case analysis,and literature research methods.The GDELT database is used to identify potential risk events in construction projects.In conjunction with previous empirical research findings,risk prevention measures for the "Belt and Road"project are proposed at the national,enterprise,and project levels.Based on existing research,this dissertation’s innovation is most visible in the following areas:To begin,this dissertation uses more detailed micro-data from the project to achieve a more accurate reflection of the investment characteristics of the "Belt and Road" project as well as a more accurate estimation of the risk relationship with the host country.The research findings not only compensate for the existing literature’s lack of micro-data,but also provide more comprehensive data support for the "Belt and Road" project’s investment research.Second,this dissertation advances academic understanding of the mechanism of host country risk affecting the investment effect of China’s "Belt and Road" project,as well as the mechanism of the "Belt and Road" initiative and bilateral investment agreements moderating effect.The mechanism of different dimensions of risks in the host country affecting the project’s investment effect is clarified in this dissertation,as is the moderating effect of the"Belt and Road" initiative and bilateral investment agreements on the investment effect of the host country’s risks.The findings provide theoretical support and empirical research for related research on different dimensions of risks in the host country and the investment effect of the "Belt and Road" project,as well as expanding research on the risk adjustment effect of the "Belt and Road" initiative and bilateral investment treaties on the host country.Third,this dissertation offers a new perspective and method for researching overseas investment project risk prevention.This dissertation develops the risk formation framework for the "Belt and Road" project using risk conduction and vulnerability theory.This dissertation uses text mining,case analysis,and literature research to analyze the risk events and vulnerability of the "Belt and Road" project,which has been declared a failure,based on this framework and the China Global Investment Tracking database and the GDELT database.The new risk events that construction projects may face are predicted.Finally,based on the empirical findings,countermeasures and recommendations for risk prevention of the "Belt and Road" project are proposed from the standpoint of risk management in the host country and project vulnerability reduction.The findings add to the body of knowledge on risk management in international investment projects.