Study On The Threshold Effect Of China Industrial Structure Upgrading And Outward Foreign Direct Investment

Since President Xi proposed “The Belt and Road” initiative in 2013,over the past six years,China domestic economy has been facing the“new normal” development trend,such as slowing down growth and overcapacity.In order to alleviate the current situation,the country has proposed “Supply-Side Structural Reform”,seeking various ways to remove excess capacity to upgrade industrial structure.With initiative of “The Belt and Road”,the countries along the line are digesting Chinese excess capacity.Meanwhile,China OFDI and industrial structure upgrading facing important opportunities and challenges,and the relationship between the two has entered a new stage of development.First of all,this paper analyzes the current status,characteristics and problems of the industrial structure and outward foreign direct investment of the countries along “The Belt and Road”.After that,on the basis of a large number of domestic and foreign references,this paper summarize the two-way interaction between OFDI and industrial structure upgrading.Furthermore,a non-linear threshold model is constructed based on the panel data of the countries along “The Belt and Road” for nearly fifteen years.The indicators such as level of technological progress,degree of regional development,institutional quality and energy use intensity are used as threshold variables and their thresholds are determined.The empirical results show that there are significant threshold effects on four types of threshold variables,and there is a single threshold for the level of technological progress and energy use intensity,while there are two thresholds for the degree of regional development and institutional quality.The impact of industrial upgrading on OFDI is different in different threshold values.Meanwhile,China has not broken through any threshold range,ranking in the middle of the countries along “The Belt and Road”.Finally,based on the empirical results,and also combined with China current economic situation,it is proposed that supply-side reform should be adhered to optimize the industrial structure.Meanwhile,In order to achieve the coordination of OFDI and the upgrading of industrial structure,we should take appropriate measures to propose “Supply-Side Structural Reform” and guide the flow of OFDI and strengthen the construction of cooperation zone.