The Impact Of Host Country's Economic Freedom On The Efficiency Of China's Outward FDI

During his state visit to Asian countries in 2013,Chinese President Xi Jinping proposed The belt and road" initiative,which has been actively responded by the international community.The initiative is aimed at strengthening cooperation with countries related and building a platform for political mutual trust and economic integration,forming a link between land and sea and linkage between East and West.Economic activities are the focus of efforts to promote "the Belt and Road" strategy,and outward investment cooperation is also one of the key and core areas.According to the investment data,the industries involved in China's direct investment to the Belt and Road" countries are increasingly diversified,the total investment to these countries has been increasing in recent years,but it is relatively low compared with China's total outward foreign direct investment.In view of this situation,this paper attempts to explore ways to effectively improve investment efficiency,raise investment level and reduce investment risks from the perspective of economic freedom,not only for the overseas development of Chinese enterprises,but also for the deepening of the principle of common construction and sharing,the exploration of win-win cooperation in outward direct investment and the promotion of each other's level of economic development.Taking the macroeconomic data of 58 countries along the "The belt and road" from 2009 to 2016 as samples,this paper discusses the influence of host country's economic freedom on the efficiency of China's foreign direct investment through stochastic frontier model.From the empirical results,China's investment in the countries along the "the Belt and Road" is positively related to bilateral GDP and negatively related to the geographical distance.This conclusion is consistent with the traditional gravity model.There is an obvious resource seeking motive for the investment,while the infrastructure level and strategic assets of the host country have no significant impact on the investment.Although for most regions China's investment efficiency shows an upward trend,there is still much room for improvement;the protection of property rights reduces investment efficiency,while it diversifies investment risk;low tax burden helps to improve investment efficiency,but it has little impact on reducing investment uncertainty;labor freedom has no significant effect on optimizing investment efficiency or investment risk;the improvement of investment freedom reduces investment resistance,but it increases investment risk.It is suggested to sign investment treaties,improve investment facilitation and rationally choosing investment location with the focus on the economic freedom of host country to improve the efficiency of investment.