The Impact Of The World Economic Cycle On China's OFDI

With the trend of globalization and economic integration,economic relations between the countries all over the world increasingly close,interdependence significantly improved,every country cannot avoid the impact of economic fluctuations by other countries.In particular,after the financial crisis,the global economy has been hit hard,the growth rate slowed down sharply,the economy of the major economies are all in the recession,the outward foreign direct investment fell sharply,seriously affected the market of the global foreign direct investment.Meanwhile,asan emerging country,China's outward foreign direct investment has sprung up.Therefore,it is an important subject to study the impact of the world business cycle on the OFDI of China,and how to maintain the steady growth during economic fluctuation.On the basis of previous literature,firstly,this paper theoretically analyses the impact mechanism of business cycle fluctuation on FDI,which find that the business cycle will influence the expected rate of return on investment through asset price,financing costs and sunk costs,meanwhile,it will also affect the investment risk,then the FDI flows and scale are changed.Secondly,in the analysis of world business cycle and China's investment situation,we find out that China's foreign direct investment is also characterized by periodic fluctuation,and the statistical analysis shows that both two are closely related.Then based on the above analysis,the data of China's investment in 110 countries and regions from 2003 to 2014 are selected as samples,we use the gravity model to analyze the impact of business cycle on China's OFDI by empirical research.The results show that China's OFDI is reduced,while the world business cycle in a period of expansion,and increased while in recession,ie,China's OFDI is inversely related to the fluctuation of the world business cycle.Allowing for asymmetry over the business cycle,we also find that the output elasticity of foreign direct investment is high in recessions than in booms.In the empirically analyses of China's investment situation in developing economies,and developed economies,we find that developed countries have greater impact on China's OFDI during the expansion period,while developing countries have greater impact in the recession period.Finally,according to the conclusions,this paper puts forward some relevant policies and suggestions to promote China's OFDI,so as to provide certain reference on our future OFDI policy.