A Study On The Influence Of Bilateral Investment Treaty And Host Country System Level On China's Foreign Direct Investment

With the implementation of one belt,one road initiative and the "going global" strategy,China's opening up has deepened and the pace of Outward Foreign Direct Investment(OFDI)has been further accelerated.Under the circumstances,it is of great significance to study the influencing factors of China's OFDI and analyze the characteristics of China's outward foreign investment,so as to promote the stable and rapid development of China's OFDI.According to the traditional theory of international investment,a country's OFDI tends to choose the country with high host county system level.Because countries with high level of host country system have more perfect political and economic system,strict property right protection environment,free and fair competition environment,which can attract more foreign investment.However,according to the data of China's OFDI,China's OFDI flows more to the countries with poor host country system level.The political and economic policies of these countries are not stable and there is no perfect property rights protection law,which means Chinese enterprises' overseas investment in these countries facing greater investment risks.As a formal legal system to protect and promote international direct investment,Bilateral Investment Treaty(BIT)can provide legal protection for foreign investment enterprises and make up for the lack of host country's system to some extent.Therefore,it is of great practical significance to test the influence of BIT,host country system level and their interaction on China's OFDI.Based on the data of China's foreign investment stock to 134 sample countries in 2007-2018,this paper uses the panel fixed effect model to test the impact of host country system level and BIT on China's OFDI,and then the impact of the interaction between host country system level and BIT on China's OFDI.Finally,through grouping,the host country system level is divided into a group higher than China and a group lower than China,to test the promotion effect of BIT on attracting foreign investment of countries with different system levels.Through empirical research,this paper draws the following conclusions:First,there is a negative correlation between the host country system level and China's OFDI.That is to say,Chinese foreign investment enterprises prefer countries with low institutional level.The reason may be that China,as a developing country,when investing in some developing countries with low host country system level,its relevant technologies are more in line with those of the target countries' Socio-economic situation than those of developed countries with high host country system level.In particular,Asian countries have the advantages of geographical location,consanguinity and similar cultural atmosphere.They have frequent economic and trade cooperation with China.Chinese foreign direct investment enterprises have more advantages in investing in these countries than developed countries.Second,BIT can promote foreign direct investment of Chinese enterprises to foreign countries especially those countries whose host country system level is lower than that of China.Third,there is a complementary effect between the BIT and the host country system level.The BIT can weaken the inhibition of the host country system level on China's OFDI.Based on the above research conclusions,this article proposes the following countermeasures and suggestions: First is to improve the relevant treaty content of the bilateral investment agreement;The second is to strengthen the prevention and supervision of foreign investment risks of Chinese enterprises;The third is to improve the foreign investment information service system.