Political Risks Involved In China’s Outward Foreign Direct Invest And China’s Mitigation Mechanism

Upon China’s adoption of the “Opening Up and Reform” policy, the outwardforeign direct investment of China’s domestic enterprises has witnessed a rough yetpromising development. In2010, China’s outward foreign direct investment netflows reached US$68.81billion, increasing by21.7%compared to the last year. Bythe end of2010, more than13,000domestic investing entities had established about16,000overseas enterprises, dotting178counties (regions) across the whole world.While enjoying the rapid development, China’s outward foreign direct investmentalso suffers from all kinds of threatens presented by the political risks as a result ofthe world’s unsteady and fragile political and economical environment particularlyafter2008. In comparison with the breath-taking achievement of China’s outwardforeign direct investment, China’s legal framework, both domestic and international,regarding the protection of its foreign direct investment seems rather rough anddisappointing, including but not limited to, the absence of the laws and regulations inrespect of the outward foreign direct investment, the obsolete bilateral investmenttreaties. This thesis intends to propose the suggestion regarding the establishmentand the perfection of China’s mechanism for protecting and promoting its outwardforeign direct investment.This thesis consists of four parts: part one, the brief introduction of China’soutward foreign direct investment in2010and analysis of the development path ofChina’s outward foreign direct investment as well as it’s characteristics; part two, the introduction of political risks and its development; part three the analysis of theexisting mechanism regarding the protection of China’s outward foreign directinvestment; and part four, some suggestions regarding the establishment and theperfection of China’s mechanism for protecting and promoting its outward foreigndirect investment.