The Political Risk Of Host Country In One Belt One Road To The Influence Of Chinese Resource-oriented OFDI

This essay is inspired by the background of the acceleration of resource-oriented OFDI of China.On the one hand,a steady,relatively fast growth of economy necessitates a stable energy supply,thus calls for a huge demand of energy;On the other hand,the deficiency of natural resources per capita in China has caused the reliance on importing energy from abroad.It is this imbalance between supply and demand that led to the acceleration of resource-oriented OFDI of China.In 2000,the flow of OFDI was $0,916 billion,and the stock was $27,768 billion;while in 2013,the former reached $107.84 billion,and the latter $660.48 billion with the annually increasing rates of 44.3%and 27.6%.By the end of 2013,around 15,300 domestic investors of China have established 25,400 companies over 184 countries or regions.The past decade has witnessed the booming of OFDI of China with the year 2014 becoming the first time for China to be a net capital exporter.According to Ernst&Young’s forecasting released in《Prospect of China’s foreign direct investment 2015》:in the subsequent 5 years,benefiting from China’s accelerating economic transformation and the reaping of benefits reform,China’ s OFDI is estimated to grow at more than 10%per year,the power of Chinese capital will play an increasingly important role in the worldwide.This essay is organized in the following three steps:raising of the question,analysis of the question,and solving the question.First,in view of endowments of natural resources,the individual’s possession is far from rich in spite of the total amount being huge.During the course of China’s economic reform,the rapid growth followed by increasing demand of natural resources transferred this country from net importer to becoming a net exporter.However,severe reliance on import brings with it the risk of break off or suspend in energy supply.Hence,considering the security of energy supply,resource-oriented OFDI is becoming a crucial element for sustainable development of economy.In fact,due to the sensitivity of the energy industry,political factors cast some uncertainties and risks to OFDI,so modeling political risks is of importance with respect to investigating into OFDI.In this "new normal" phase of economy,China duly initiated the "Belt and Road" strategy which would be the guiding principle of OFDI or even the opening policies for a long period in the future.Hence,studying how China’s OFDI will be influenced by the political risks of those host countries long the line which are the main resourceful objects of China’s OFDI,will be of help for the stability of OFDI growth and the security of energy supply.Next,chapter two of this essay is the comprehensive summary of what has been done by earlier researchers.In chapter three,some potential host countries will be picked by the standard of endowments in natural resources as the destination of FDI,which followed by a thorough description of OFDI in these countries and the political risks our country is confronted with.In chapter four,a theoretical foundation is provided originating from the Eclectic Theory of International Production and the theory of periodical investment development first demonstrated by J.H.Dunning,followed by an analysis of the political risks of those selected candidates using the framework given above.In chapter five,a hypothesis is brought up and will be verified through an empirical research,which suggests the political risks have a significant negative impact on OFDI with the implication that OFDI would go up as risks alleviate.Finally,a number of suggestions are proposed with respect to risk management for OFDI along the line.As for a government,it is necessary to maintain a good relation with other countries,make bilateral or multilateral agreements,strengthen the early warning system of political risks,and duly interference after the outbreak of some political events.As for a company,it is suggested that state-owned enterprises take advantage of close relations with the government,together with the abundance of the funds.Also to establish a good image for itself,run business in line with laws and regulations are premises for a through management of political risks.