The Impact Of Bilateral Political Relations On China's Foreign Direct Investment

Since China implemented the "going out" strategy in 2001,China's foreign direct investment has developed rapidly.According to the statistics of the Foreign Direct Investment Statistics Bulletin,China's foreign direct investment flows increased from 2.9 billion U.S.dollars in 2003 to 129.83 billion U.S.dollars in 2018,with an average annual growth rate of 28.84%.In September and October 2013,during his visit to Central Asia and Southeast Asian countries,Chinese President Xi Jinping proposed a major initiative to jointly build the "Silk Road Economic Belt" and "21st Century Maritime Silk Road",which received great attention from the international community..After the 16th National Congress of the Communist Party of China raised the "going out" strategy to the national strategy,the government promoted enterprises to invest overseas to become a new trend.As an important part of the "going out" strategy,OFDI can not only enable Chinese companies to access the world's capital,technology,natural resources and strategic resources,but also enhance their ability to allocate resources on a global scale.Foreign investment is not only for China's future.Development has important strategic significance and can also enhance China's influence in the global economy and enhance China's international voice and international competitiveness.The countries along the "Belt and Road" are not only vast and have a large population,but also contain huge market potential and investment opportunities.Investment in countries along the route can not only help these countries and regions improve their infrastructure,improve their economic development level and production capacity,but also enable China,which is in the reform of the deep water region,to further open up overseas markets,alleviate excess capacity,and eliminate Trade barriers accelerate the integration and development of the economies along the line,and thus provide new impetus for the development of the world economy.In 2018,Chinese enterprises invested 15.64 billion U.S.dollars in non-financial direct investment in 56 countries along the "Belt and Road",an increase of 8.9%year-on-year;in terms of foreign contracted projects,Chinese enterprises signed contracts for foreign contracted projects in the countries along the "Belt and Road".The newly signed contract amounted to US$125.78 billion,accounting for 52%of the newly signed contract value of China's foreign contracted projects.The completed turnover was US$89.33 billion,accounting for 52.8%of the total amount for the same period,representing a year-on-year increase of 4.4%.It is foreseeable that with the in-depth implementation of the "Belt and Road",China's foreign direct investment will usher in a new round of growth.However,to better promote China's direct investment in countries along the "Belt and Road",it will face many challenges.On the one hand,marked by the outbreak of Sino-US trade disputes,the world economy officially entered a critical stage of order reshaping in 2018,and the development of the world economy is facing serious uncertainties;on the other hand,some countries along the "Belt and Road" Political changes have been frequent,and geopolitical conflicts have intensified the situation.These factors will make China's investment in countries along the "Belt and Road" face serious challenges.Therefore,as the main body of foreign direct investment,enterprises need the support of the state and government level when investing in countries along the "Belt and Road".Among the many factors affecting China's foreign direct investment,the inclusion of bilateral political relations in the factors affecting foreign direct investment can not only enrich the theory of foreign direct investment from a theoretical level,but also provide a reference for Chinese enterprises to carry out foreign direct investment activities.However,unfortunately,in the past studies on factors affecting China's foreign direct investment,scholars have focused more on factors related to markets,resources and institutions,and most have ignored the role of bilateral political relations.This paper will introduce China's foreign direct investment research through bilateral diplomatic activities represented by quantitative high-level mutual visits,and provide a new research perspective for understanding China's foreign direct investment behavior.Based on the direct investment data of China along the "Belt and Road" in 2003-2016,this paper uses the extended investment gravity model and the interdisciplinary research method based on the investment theory of developing countries and the theory of specific advantages of the home country.Study the impact of bilateral political relations on China's foreign direct investment.This leads to the following conclusions:First,the development of bilateral political relations has indeed promoted China's direct investment in countries along the "Belt and Road";second,the longer the two countries establish diplomatic relations,the more frequent exchanges of high-level visits and the smaller the political friction.The more favorable it is for China to carry out foreign direct investment activities in the country,but the role of friendly cities in promoting foreign direct investment is not obvious.Third,China's direct investment in countries along the "Belt and Road" shows the characteristics of "institutional risk aversion" and "institutional proximity".The current situation is both an opportunity and a challenge.At present and in the future,from the government level,we should actively strive for a peaceful and stable international environment and a good neighborly and friendly environment.On the other hand,we should vigorously develop friendly relations with other countries and deepen our The cooperation of other countries to consolidate friendly bilateral political relations and reduce the uncertainty of enterprises' operating risks in the host country has escorted Chinese enterprises to carry out cross-border investment activities.From the enterprise level,when conducting foreign direct investment activities,bilateral political relations should be taken as an important reference factor to raise awareness of risk aversion and rational use of the favorable environment brought about by friendly bilateral political relations.The innovations of this paper are as follows.First,the literature on the factors affecting China's OFDI in the past is more focused on the analysis of economic factors,and a small part is concentrated on non-economic factors.Even if non-economic factors are added,most of them only include institutional factors.Less consideration of the role of the government in foreign investment,this paper takes the government factor in the specific advantage of the home country as the core explanatory variable,and adds the institutional environmental factors of the host country to the regression equation to examine its impact on China's OFDI,in order to study China's OFDI Provides a unique perspective.Secondly,for the quantitative treatment of bilateral political relations,the past scholars use different measurement methods.This paper uses the four dimensions of indicators commonly adopted by scholars in recent years to measure bilateral political relations and comprehensively measure bilateral political relations.The research in this paper is a good way for China to better play the role of big country diplomacy,better stimulate the function of political service economy,promote Chinese investors to arrange in advance along the"Belt and Road" countries,implement the "Belt and Road Initiative" and realize it soon.The interconnection and intercommunication of countries has important reference significance.