The Influence Of Diplomatic Relations On China's Direct Investment In Countries Along "The Belt And Road"

In the era of economic globalization,countries' economic development has become increasingly close.As an important way for enterprises to expand overseas markets and acquire resources and technology,international direct investment plays an increasingly important role in the economic development of various countries.Since China put forward the “going out” strategy in 2000,foreign direct investment has mushroomed,and with the improvement and promotion of the “Belt and Road”initiative,Chinese companies have responded positively to government policy calls,and the stock of investment along the “Belt and Road” countries is also growing rapidly.However,most countries along the “Belt and Road” are developing countries.They have been plagued by terrorism and separatism for a long time.The political situation is turbulent and enterprises face greater political risks.The smooth progress of the “Belt and Road” strategy and the growth of China's investment in countries along the line cannot be separated from the role of the government,especially the diplomatic activities of the government.Therefore,this paper focuses on the diplomatic activities of the government and studies the impact of diplomatic relations on China's direct investment in countries along the “Belt and Road”.The findings of this paper provide a scientific basis for China to effectively use economic diplomacy and promote further cooperation among countries along the Belt and Road.Firstly,this paper sorts out the research on the influencing factors of international direct investment at home and abroad,and provides the basis for the choice of explanatory variables and control variables.Secondly,the paper analyzes the diplomatic status quo and the status quo of direct investment between China and the countries along the Belt and Road.Finally,based on theoretical and empirical experience,put forward relevant assumptions.In the empirical analysis,select three variables of high-level visits,diplomatic relations,and sister cities as sub-indicators of diplomatic relations variables.and comprehensive indicators of diplomatic relationsthrough calculation.The panel error correction model is used to empirically test the data hypotheses of 45 countries along the “Belt and Road” in 2003-2017,and analyze the impact of diplomatic relations on China's direct investment in countries along the“Belt and Road”.Since the diplomatic visits of senior leaders play an irreplaceable role in coordinating and maintaining friendly diplomatic relations,this paper further studies the role of high-level mutual visits in regulating the economic and institutional factors of host countries in order to deepen their understanding of the theme.The research conclusions are as follows:First,good diplomatic relations help China's direct investment in countries along the “Belt and Road”.At the same time,high-level visits,diplomatic relations,and friendly cities all exert positive effects on China's direct investment.Second,the natural resource endowment plays a role in promoting China's OFDI,and high-level exchanges of visits between China and the countries along the “Belt and Road” are conducive to China's smooth investment in its natural resources.Third,The high-level exchange of visits between China and the countries along the “Belt and Road” has little effect on China's direct investment promotion in the host country with large market size,large market potential and high market openness.At the same time,the empirical evidence also proves that in the countries along the“Belt and Road”,the market size,market potential and market openness of the host country all exert positive effects on China's OFDI.Fourth,high-level exchanges of visits between China and the countries along the“Belt and Road” can make up for the negative impact of political instability in the countries along the line on China's OFDI.At the same time,the empirical evidence also proves that the political stability and corruption control ability of the host country is not an important factor in China's direct investment in countries along route.Finally,in order to make better use of the role of government diplomacy and promote the “Belt and Road Initiative”,this paper proposes several policy implications based on theoretical and empirical research.