Host Country Political Uncertainty,Bilateral Political Relations And China’s OFDI

Since the reform and opening up,China has attracted more and more foreign direct investment.With the continuous improvement of national economic strength,the government gradually began to change the policy,implement the "go out" strategy,encourage enterprises to invest abroad.According to statistics,from 2009 to 2019,The average annual growth rate of China’s OFDI flow was 24.5%.In 2020,China’s OFDI flow reached us $153.71 billion,up 12.3 percent year on year.Ranked first globally for the first time,with a global share of 20.2%.In recent years,there has been a rising trend of political uncertainties abroad,such as the rise of populist parties in the EU and the election of Donald Trump,which will greatly affect China’s outbound investment.At present,most studies focus on the influence of political uncertainty on China’s OFDI.However,bilateral political relations between China and the host country also play a certain role in restricting IT.Ignoring this point will lead to bias in research results.Based on this,this paper studies the influence of host country’s political uncertainty and its interaction with bilateral political relations on China’s OFDI.We measure political uncertainty with political elections in host countries,and conduct an empirical study based on China’s OFDI flow data from 2003 to 2019 and political election data from 66 countries.The results show that,on the whole,there is a significant negative correlation between host country political uncertainty and China’s OFDI,and bilateral political relationship can positively regulate this negative correlation.When the bilateral political relationship is close,the inhibition effect of political uncertainty of host country on China’s OFDI becomes weaker.When the bilateral political relationship is estranged,the political uncertainty of the host country is more unfavorable to China’s OFDI.Moreover,the negative correlation between political uncertainty and China’s OFDI and the moderating effect of bilateral political relations are also subject to the economic development speed and institutional quality of the host country.This paper provides an explanatory path for the study of the relationship between host country political uncertainty and China’s OFDI.