National Political Risks On The Impact Of China’s Foreign Direct Investment

In2011, China’s outward foreign direct investment flows and stocks were$74.65billion and$424.78billion, more than13,500domestic investors in the country (territory) have established18,000foreign direct investment enterprises outside, distributed in177countries and regions on five continents. Flow among the world’s countries (regions) ranked sixth, stocks ranked thirteenth. When facing the importance selecting of foreign direct investment of selected, more and more Chinese enterprises investment flows to countries and regions with a higher level of political risk. In this context, studying the political risk elements in the host country Chinese enterprises consider during the importance selecting of outward foreign direct investment is very necessary, and also in line with the actual needs of countries and companies. In this paper, some relevant political control variables to detect a range of political risks related indicators to identify these indicators on the relative importance of Chinese OFDI. This empirical test examined the impact caused by the elements of the host country political risk including government stability, socio-economic conditions, investment returns, internal and external conflicts, political corruption, military and political, religious tensions, law and order, ethnic tensions, democratic and bureaucratic institutions. Unlike the classic theory, the results show that Government Stability has a negative impact on Chinese OFDI. Also, Corruption will decrease the importance of Chinese OFDI option. Then we discuss the reasons for the different elements affect the importance of foreign direct investment of Chinese enterprises, and put forward a number of recommendations for the current status of China’s foreign direct investment enterprises.