Research On The Country Risk Of China’s Foreign Direct Investment In African Countries

Since the beginning of the 21 st century,China’s economy has been developing at a fast speed,and its comprehensive national strength has been continuously improving.The Chinese government has put forward the strategy of “Going out” and “the Belt and the Road” in a timely manner,encouraging and supporting foreign direct investment of enterprises with comparative advantages.Under the advocacy of these policies,more and more Chinese companies have begun to go abroad and open up the international market.With abundant natural resources and rapid economic growth,Africa has become a popular choice for overseas investment in China,attracting many companies to invest.However,due to the large differences in economic development among African countries,there are certain differences in the political environment,cultural practices,and natural conditions in various countries.Therefore,China’s investment in Africa still faces a lot of risks.With the further expansion of China’s direct investment in African countries,the strategic requirements of China’s foreign investment enterprises have risen to accurately identify the country risks in foreign direct investment of African countries and effectively control them.This paper first introduces the theory of foreign direct investment and country risk,summarizes the characteristics of China’s foreign direct investment in recent years,and systematically reviews China’s investment in African countries since the 1970 s.Then the paper makes a comprehensive analysis of China’s local investment in Africa,and focuses on the main country risk environment of this investment destination.Then,the political risk,economic risk and social risk indicators of 22 African countries with certain representativeness from 2008 to 2016 were selected for model establishment and empirical analysis to test the main country risk factors on the influence degree of foreign direct investment.The conclusion shows that the political risk of African countries has a promoting effect on China’s OFDI,and the economic and social risk has a restraining effect.That is to say,China’s direct investment in Africa has a certain preference for political risk,but evades economic risk and social risk.Finally,according to the analysis results,this paper provides feasible suggestions for Chinese government and enterprises to correctly identify risks investment risks and avoid unnecessary investment losses when making direct investment in Africa under the new situation of “the Belt and the Road” and “Going out” strategies.