The Influence Of Host Country’s Political Risk On China’s OFDI

Since 2013,"The Belt and Road " strategy not only arouse wide concern and strong resonance among international community,but also gain enthusiastic support and response along these routes.The gradual formation of the principle of achieving shared growth through discussion and collaboration promote the deepen economic cooperation between countries along routes.The supporting facilities to promote investment activities gradually improved,and the degree of trade and investment facilitation has also increased rapidly.As a result,the investment cooperation between China and the countries along the line has come to a new peak.However,in recent years,some major investment projects in China’s enterprises have suffered major losses due to political turbulence.That means,such levels of political risk restricts"going global" of Chinese enterprises more or less.Therefore,as the implementation of "The Belt and Road" strategy is still going on,we should also take fully account of the influence of the host country’s political risk on our country’s OFDI.And the reasonable assessment of political risk has become a key element before foreign direct investing.Based on the domestic and foreign classic investment theory and research results,this paper systemically analyses the research on the impact of OFDI at home and abroad,using the method of qualitative analysis and quantitative analysis.First,from the theoretical analysis aspect,this paper discuss the mechanism of political risk influence on the base of current status of OFDI on countries along the routes.By using panel data model from empirical analysis angle,the paper conducts empirical tests on the effects of political risk on OFDI.Then the paper further optimizes related governance policies about OFDI among countries along these routes based on theoretical analysis and empirical research.The empirical results show that the measurement of Political Risk Index is significant to OFDI among the routes,i.e.the reduction of the host country’s political risk can promote our direct investment in the host country.Therefore,it is an important motive for Chinese enterprises to seek a good political environment in the host country and reduce the loss of the interests of the enterprises to the greatest extent.The host country with high political risk can not only provide good institutional support for investors,but also leads to the risk of the capital of investors being confiscated.So multinational enterprises must measure political risk of host countries based on sufficient survey,inc.political stability and adequate infrastructural facilities.Then,making efforts to avoid the political risks caused by the chaos of the host country,the internal conflict and so on.Apart from the aspect of political risk on OFDI,the size of the host country’s market,the economic opening degree and the abundance of resources are also the important factors that affect the OFDI of our country.In fact,in the process of foreign investment,China’s multinational enterprises also tend to country or region with a large and an opening economic market,which is conducive to the investment of Chinese enterprises.