China's Direct Investment In Five Central Asian Countries Under The Background Of The "One Belt And One Road": Investment Environment And Industry Choices

With the implementation of "the Belt and Road" initiative,China Outward Foreign Direct Investment(COFDI)has entered a new stage.Countries along "the Belt and Road" gradually become new COFDI investment hotspots.As the center area of "the Silk Road Economic Belt",the five Central Asian countries are the first stations of China's westward development and they are also important energy supply area of our country.In recent years,the stock of COFDI absorbed by the five Central Asian countries has been rising rapidly.However,due to the lack of comprehensive domestic research on the five Central Asian countries,there are many doubts when China corporations chooses to invest in Central Asia,such as the investment environment,the development situation,the present situation of each industrial sector and how should Chinese investors choose the investment area and the investment industry,etc.These are the urgent problems that need to be solved.Based on the theory of H-O,marginal advantage expansion,international production compromise,small-scale technology,inductive factor portfolio,this paper employed the related research and statistical data to analysis the location and industrial release status of China's direct investment in the five Central Asian countries.To set up an investment environment evaluation system,the "cold and hot country"contrast method and the entropy weight method is used to examine the investment environment of the five Central Asian countries and the evaluation is made from the macroscopic and the meso-micro point.Based on the comparative analysis of industrial structure between China and the five Central Asian countries,the industrial differences between them are measured by using industry isomorphism index and RCA index.The data mainly come from UNCTAD stat,UNComtrade database,World Development indicators Database,Transparency International,Economic Cooperation Organization,Asian Development Bank,Ministry of Commerce of China,Bureau of Statistics of China,National Statistical Committee and National Bank of the five Central Asian countries,etc.The conclusions are as follows:(1)China's direct investment in the five Central Asian countries has developed rapidly,but the investment structure needed to be further improved.During the 2003 to 2015,the stock of COFDI in the five Central Asian countries increased from 44 million to 8.1 billion,maintaining a rapid upward trend while the overall trend of flow change can be divided into two stages:2003 to 2012 is a rapid upward period,2012 to 2015 is a period of volatility decline.The share of COFDI stock in total FDI stock absorption in the five Central Asian countries and COFDI stock absorbed by the five Central Asian countries in total COFDI stock showed an upward trend,but the specific gravity was smaller,the share was less than 5%in 2015.At present,COFDI in the five Central Asian countries is mainly located in Kazakhstan,followed by Kyrgyzstan,Tajikistan,Turkmenistanand Uzbekistan(For ease of writing,abbreviations are used for some of the following country names).China's investment in the five Central Asian countries is mainly concentrated in mining,manufacturing,construction,wholesale and retail,transportation and other industries that to diversify the development.(2)There were obvious differences in the investment environment among the five Central Asia countries.Kazakhstan has the best overall investment environment and it's a "hot" country among the five Central Asian countries.The investment environment of Uzbekistan,Turkmenistan and Kyrgyzstan is in the middle level,which belongs to the"medium" environment that suitable for investment.Tajikistan's investment environment is poor and it's a "cold" country.There are also some differences about the investment environment in different inner regions.The priority of investment in Kazakhstan region is North,South,West,Centre and East.The priority region of investment in Uzbekistan is Samarkand and Bukhara,central,Fergana basin,South and North,while in Turkmenistan is East,West,South and North,in Kyrgyzstan is Bishkek and North-West,Fergana Basin,Isek Lake and Tianshan,in Tajikistan is Central,North,South and East.(3)The industrial structure of China and the five Central Asian countries showed different characteristics.During the 2003 to 2015,the proportion of China's primary industry to GDP decreased gradually.The turning point of the ratio of the secondary industry to GDP was 2006,which showed the trend of rising at first and then decreasing,but the change was relatively small.The proportion of tertiary industry to GDP was rising slowly,but the tertiary industry overtook the secondary industry and became the largest of the three industries in 2012.China's three industries as a whole present "three,two,one" industrial structure,but the secondary industry is still in the leading position.The proportion of the primary industry in the five countries of Central Asia GDP is decreasing.The change trend of the secondary industry is different,but the overall proportion is relatively high,and the mining economy plays an important role in each country.The tertiary industry(except for the Turkmenistan)has the largest proportion,and shows an upward trend.The industrial structure of the five Central Asian countries is unreasonable and the processing industry is backward,which is manifested in the following aspects:the heavy industry is developed and the light industry is backward,the raw materials are abundant and the consumer goods are lacking,the rough-wrought product are exported more and the deep processing products are less,it rely heavily on international markets.In addition to the three industrial structures of Turkey as "two,three,one",Kazakhstan,Ukraine,Kyrgyzstan and Tajikistan all show the characteristics of "three,two,one",all of which account for the highest proportion of the tertiary industry in the gross domestic product.However,the proportion of the three industries is a relative indicator.The Central Asian countries have formed such industrial structure characteristics not their economies have developed to the level of developed countries,but the economies of Central Asian countries are relatively small,the development of the primary and secondary industries(mainly manufacturing)lags behind,and the industrial structure is unreasonable.(4)China and the five Central Asian countries were highly complementary in their industries and had great potential for cooperation.? Comparative advantage leading type:Compared with the five Central Asian countries,China has comparative advantages in the three industries of SITC6(manufactured goods by raw material),SITC7(Mechanical and Transport equipment)and SITC8(Miscellaneous products).Therefore,priority should be given to the investment in these inusties.By investing in such industries,China can adjust its domestic industrial structure by transferring some of its excess capacity outward,while the five Central Asian countries can raise the level of domestic manufacturing,this will create a win-win situation.?Resource seeking leading type:The five countries in Central Asia have stronger competitiveness than China in the four industries of SITCO(Food and living Animals),SITC'1(Beverages and Tobacco),SITC2(non-edible raw materials(other than fuels))and SITC3(fossil fuels,lubricants and related raw materials),especially in mineral products,so we should focus on the investment in these industries.By investing in such industries,China can not only meet the domestic demand for energy,minerals and raw materials,but also improve the structure of energy imports.The five Central Asian countrieshave received financial and technical support in areas such as mining and further promote the development of the national economy.?Market search leading type:China and five Central Asian countries have weaker competitiveness in the SITC4(Animal Oil,vegetable Oil,Fat and Wax)and SITC5(Chemicals and related products).When Chinese enterprises invest in five Central Asian countries,they should attach importance to such industries with market prospect.By investing in such industries,China can preempt the potential for demand,while the five Central Asian countries can meet demand for such products.The innovation of this paper is that it has analyzes the investment environment of the five Central Asian countries by constructing the investment environment evaluation system and gives the investment location suggestions from the macro,medium and micro angles,measures the difference of industrial structure between China and the five Central Asian countries.It is found that the industries of both are more complementary and summed up the three dominant types of COFDI in five Central Asian countries, which is in order to provide theoretical support and practical advice for COFDI in the five Central Asian countries industry and location selection.