Impact Of Belt And Road Initiative On Chinese Firms’ FDI In Energy Sector

As a carrier of capital flows,foreign direct investment(FDI)is helpful to the upgrade of economic structure and industry for host countries,fueled by technology transfers and knowledge spillovers.Initially FDI led by developed countries is based on comparative advantages and ownership advantages in terms of efficiency-oriented,market-oriented and resource-oriented FDI.Apart from advanced technologies and management skills,the culture exchange of institution,laws,education and entertainment appeals to more competitiveness in the long run for host countries,which are usually developing countries.After knowledge absorbing and continuous innovation,developing countries as emerging economies in recent years have started to perform FDI abroad.Induced by the small-scale technology which is specific to developing countries,FDI to some extent does good to economic growth to both host and local countries,which is often driven by technology and resource seeking.While it is continuously fluctuated in international trade,political and economic risks arise under the pressure of unilateralism against globalization.Chinese government is on way to perform a shared principle in business,construction and profits against the downward pressure from unstable trading conditions.Belt and Road Initiative(BRI)is one of policies contributed to a sustainable growth,which encourages more Chinese firms invest abroad.Besides the contribution to economic development,there are certain troubled transactions existed because of the national complexity,and China is now staying in the center of criticism,so this paper aims to exploit the current situation,impact and potential threatens of Chinese FDI in BRI countries through the literature analysis and estimated regression;the history and trend of international trade including characteristics and theories of FDI are referred to.Basically,styled facts about Chinese FDI and BRI countries are listed before estimation,which helps to further understand the reality.Here,Propensity Score Matching-Difference in Difference(PSM-DID)model is utilized to estimate the impact shocked by the initiative in 2014 in terms of FDI value and troubled FDI value in energy sector,followed by a series of robustness tests and heterogeneity analysis.Finally three main findings are drawn.First,more FDI by Chinese enterprises is found after the implementation of BRI.Second,troubled transactions are negative to the BRI.Finally,the BRI’s effect is regionally heterogeneous,which means that investor are more willing to invest in a region close to China,like East Europe and Southeast Asia other than South Africa;and construction contract is more significant to the BRI policy.Thereafter,BRI doesn’t account for the troubled FDI,so there is no excuse for impertinent biases from critics on BRI any more and more objective justice is needed in international trade.Simultaneously,there is still a large room for the Chinese government to improve risk-reversed skills and market access modes of FDI.Also,the management of nation image and policy promotion is required.