Impact Of Country Risk On China's OFDI

The "Belt and Road" strategy has made significant progress since the implementation of the country.As the largest external infrastructure construction and economic development project ever implemented in China,the strategy of connecting land and sea to the Eurasian continent is expected to total US$8 trillion,attracting participation from nearly 70 countries along the route.However,while the "Belt and Road" construction has achieved great achievements,the risks existing in countries along the route are also important factors that should be considered in the investment process.At this stage,most countries along the "Belt and Road" are developing countries.Among these countries,the level of economic development,religious status,culture,history,etc.are very different.This area is also the hardest hit by political competition and terrorism.Therefore,China will face enormous challenges when investing in the region.National risk refers to the degree of danger faced by assets in the host country during the process of foreign direct investment.It originates from potential losses caused by changes in the form of national politics,economy,finance,society,etc.,and will affect the location,mode and scale of cross-border investment.Business performance has an important impact.At the same time,because of the three characteristics of foreign direct investment,such as physicality,operation,and asset solidification,such economic activities are more susceptible to the risk changes of the host country.This paper collected 57 of the 64 countries along the "Belt and Road" and 13 secondary risk indicators data for the five years from 2011 to 2015.After standardizing the data,the 13 risk indicators were combined into political risks using the entropy method.The four major risk indicators,economic risk,social risk and financial risk,and divided 57 countries along the "Belt and Road" into five major regions according to the country where the country is located,establishing a time-risk line chart,the results show that:different regions(except From the period of 2012-2015,the national risk level of the West Asia and the Middle East showed a downward trend,indicating that the investment environment of the host country faced by the "One Belt,One Road" strategy is generally trending.Among them,Central and Eastern Europe is in politics and society.The risk level is the lowest,and the economic and financial risks in Southeast Asia are better.The risk characteristics of the two are complementary.Secondly,the introduction of China's flow of OFDI along the line as a dependent variable,select the host country's per capita GDP and the total value of a country's export products as the ratio of GDP to the control variables,establish a panel model,and further examine 39 of them,The relationship between national risk and OFDI,the empirical results show that:the host country's economic risk and financial risk have inhibited China's foreign direct investment in the countries along the "Belt and Road",among which economic risks have significant inhibition,and financial risk suppression is relatively Weak;political risk has a positive effect on China's foreign direct investment in countries along the "Belt and Road",which is inconsistent with the original hypothesis;social risk has no obvious effect on China's OFDI.In the short-term,when China deploys the "One Belt,One Road" development strategy,investment in some countries will be based on geographical,cultural and strategic considerations,causing political and social risks to deviate from expectations,but in the medium and long term.In view of the economic development of the countries along the "Belt and Road" and the stability of the society,the political and social risks of the host country will be considered more in the OFDI process in China.Therefore,special attention must be paid to this in future decisions.Two major risks.