The Influence Of The 'Belt And Road' On Chinese Cross-border M&A In Countries Along The Rout

Nowadays,the world economy is still in the stage of deep adjustment after the crisis,and the economy has recovered slowly.It was predicted that the growth of economy tends to be slow in a long term.The advanced economies such as the United States,Europe,and Japan are still in a depressed state and the leading role in world economic growth is significantly weakened since the overall consumer demand is insufficient and investment growth is slow.Compared with developed economies,although economic growth rates of India and other emerging market countries are optimistic,they are still unable to become the main force driving the world economy due to the small size of the economy.In addition,some emerging market countries still face many problems,such as single economic structure and excessive fiscal deficits.Under the circumstance that the international environment is not optimistic,Chinese economy has also entered a new normal stage from a period of high-speed growth.Industrial upgrading,expanding domestic demand,and cultivating new economic growth points have become the primary tasks for Chinese economic development at this stage.In this condition,Xi Jinping who is the Chinese president proposed the "Belt and Road"in September and October 2013 when he visited Southeast Asian countries.The "Belt and Road" places greater emphasis on a more comprehensive,coordinated,and high-level "going out" which will further promote the "going out" of Chinese equipment,services,currency,technology and culture by increasing foreign investment.The "Belt and Road" is not only conducive to China's expansion of domestic demand and fostering new economic growth points,but also beneficial to promote the coordinated economic development of countries along the "Belt and Road".It has been four years since the "Belt and Road" was proposed in 2013.According to the statistics released by PwC,there were 196 cases of cross-border M&A in "Belt and Road" countries launched by Chinese company between 2000 and 2016.Especially in 2017,when total scale of Chinese cross-border M&A saw 42%,Chinese cross-border M&A in the "Belt and Road" countries had an explosive growth.Most of the relevant researches are still in the stage of qualitative analysis regarding to whether the explosive growth was caused by the "Belt and Road" or how the "Belt and Road" affects Chinese companies' cross-border M&A in countries along the "Belt and Road".It may be due to the short time since the initiative was proposed and related supporting policies are still improving.On the other hand,it may be because that the number of cross-border M&A in the "Belt and Road" country has only begun to grow rapidly since past two years,which is not attracted the attention of domestic and foreign scholars.This paper uses the PSM-DID model to analyze the effects of the "Belt and Road" initiative on Chinese cross-border M&A in countries along the route.This can not only complement current research in the "Belt and Road" field,but the valuable guidance for Chinese companies.This paper firstly conducts a qualitative analysis on Chinese cross-border M&A along the "Belt and Road" in terms of scale,investment methods,regional distribution,industry distribution,and investment subjects.From 2000 to 2016,China had 196 cross-border M&A in the "Belt and Road" countries,which accounted for 1.49%of the total number of M&A cases in the "Belt and Road" countries;the accumulated amount was as high as $44.28 billion.From the perspective of investment forms,Chinese investment in the "Belt and Road"countries are mainly in terms of greenfield investment,followed by M&A.From the perspective of regional distribution,the amount of Chinese M&A in the "Belt" countries are higher than those in the "Road" countries.ASEAN is Chinese main destination for M&A in the "Belt and Road" region,followed by the Commonwealth of Independent States,Central Asia,and West Asia.In terms of industry structure,the top three industries of Chinese cross-border M&A in the "Belt and Road" countries are energy and power,information technology,and raw materials.From the perspective of investors,the main Chinese investment entities in the "Belt and Road" countries have changed from state-owned enterprises to state-owned enterprises and private enterprises.Then,this article carries out a parallel trend test of China's cross-border M&A data between the "Belt and Road" countries and non-"Belt and Road" countries during 2008-2016,as well as the PSM-DID model to analyze whether the"Belt and Road" will affect Chinese M&A in the "Belt and Road" countries.Meanwhile,the paper not only analyzes the influence of host country's political environment,natural endowments,bilateral investment protection agreements and other macro factors on China's cross-border M&A in "Belt and Road" countries,but whether the impact of natural resources and political environment on Chinese cross-border M&A is accompanied.The research results show that the "Belt and Road" policies has significantly promoted Chinese cross-border M&A in countries along the route,but the impact is not great.The main reasons may be the time characteristics of cross-border M&A and the initial effects of policies.In addition,the study also found that in the PSM-matched sample countries,the political environment of the host country has a positive correlation with Chinese cross-border M&A,and there is a positive correlation between natural resources and Chinese cross-border M&A.However,in countries where political risks are generally high and natural resources are abundant,bilateral investment protection agreements don't have a significant impact,but they can enhance the positive attraction of political environment to Chinese cross-border M&A,thereby promoting China's cross-border M&A.At the end of this paper,the corresponding enlightenment is put forward according to the results of the study,and the limitations of this paper and the direction of more in-depth research are elaborated.