An Empirical Study Of The Effects Of Political Factors On China's Outward Foreign Direct Investment

With the slow recovery of the global economy and the change of world economic structure in recent years,emerging economics have become the backbone force in promoting further development of foreign direct investment(OFDI).With the support of"going-out" strategy,China as the representative of emerging countries has make great progress in overseas investment and show a trend of rapid growth.According to 2015 Statistical Bulletin of China's Outward Foreign Direct Investment issued by Ministry of Commerce,in the year 2015,China's outward foreign investment achieved a historic breakthrough and the flows of OFDI ranked second in the world for the first time just after US.At the same time,China also experienced net capital outflows from two-way foreign direct investment for the first time.With the promotion of "the Belt and Road Initiative" the development of China's OFDI will enter into a new phase definitely.With the background of global economy,the relationship between countries is getting closer and closer.Political relations has been very important in the process of China's overseas investment.From the aspect of political risks and relations,Situations like the changes of macroeconomic environments resulted from the turbulence of world political situation and the tension of the regional situation and political interference or other non-market factors may lead to failures of China's overseas investment and that definitely hinders the pace of investment.In order to make China's outward foreign direct investment process smoothly,we must have a fully understand the influence of political risk on it.On the other hand,in the current international situation,there is new meaning for bilateral political relations.Sound political relations gradually are considered to be an important factor in promoting outward foreign direct investment.It is widely considered that things such as the policy support provided by the government or the leaders from two country visiting each other and so on can create a favorable investment environment.Therefore,there is much more significance in both theory and practice to have an accurate acknowledge of what bilateral political relations play in the China's OFDI.Under the above background,this paper makes an empirical study on the impact of political factors on China's foreign direct investment from the perspective of the political risks and relations with literature research and qualitative analysis Method and empirical study.First of all,this paper states the assay's background and meaning and method;Then it states the development of China's OFDI and analyzes the main problems of overseas investment briefly.After that,it analyzes the political risks faced by Chinese enterprises and the current situation of political relations in the overseas investment.Then it puts forward the some relevant assumptions according the theory of traditional and modern outward foreign direct investment which is the basis of the empirical study.At the same time,this paper will do some empirical studies about the impact of political risks and relations on the basis of different groups such as developed countries and developing countries and draw a conclusion.Finally,we put forward several suggestions for the above conclusion from the aspect of government and enterprises.This paper turns out that:there is a negative correlation between the political risk of the host country and China's foreign direct investment.The sound bilateral political relations can effectively promote the development of China's OFDI.And the sound relations between two counties can reduce the negative effect of political risk on some extent.But all of above is different from country to country.Sometimes China's enterprises may ignore the risks when they choose to enter into markets of developed counties.However they may show an attitude of preferring risk.And political relations play a greater role in developing countries than developed one.Therefore,the government should establish and maintain the sound political relations with the host countries and the enterprises should fully take advantage of that and finally make a further promotion of China's OFDI.The paper's creative points are:it replenishes the current researches of the factors affecting the China's OFDI in the aspect of research interests.Then it considers the political factors from the aspects of political risk and political relations from the way of research content.The shortcomings of this paper appear in that because political factors involves many aspects and this paper picks up only two aspects so that it is likely to affect the accuracy of empirical research.