The Influence Of Bilateral Political Relationship On Location Choice Of China’s Outward Foreign Direct Investment

In the post-crisis era,global economic growth is sluggish,regional trade protectionism is on the rise,globalization is fragmented,and political interference in economic activities is common,especially in recent years,the role of state will has become more prominent and can even transform market forces.Against this backdrop,Chinese OFDI is facing great challenges,and the choice of investment location must be made with great care.In order to reduce the risks of OFDI and the losses from unexpected situations,the influence of bilateral political relations becomes more and more important.This paper explores the influence of bilateral political relations on investment location selection,summarizes the successful experiences and insights of representative Chinese enterprises,and provides lessons for Chinese OFDI location selection,which is important for the development of Chinese enterprises in the new era.This paper selects the panel data of Chinese outward FDI flows from 2009 to 2020,adopts a fixed-effects model,and combines case studies to analyze the influence of bilateral political relations on the location choice of Chinese outward FDI.First,this paper composes and summarizes the relevant research results on location choice of OFDI and bilateral political relations,and digs out the research innovation points of this paper.Second,on the basis of sorting out the data of China’s outward FDI flows and the macro environment of location selection,this paper analyzes the facts of the characteristics of China’s political relations with ten countries,including the United States,Singapore and the Netherlands,and the corresponding status of China’s FDI flows to them.Again,this paper analyzes the location choice of Chinese OFDI by combining investment location choice theory and critical international political economy theory,analyzing the role of influencing factors such as bilateral political relations,host country political risk,host country market size,tax burden,investment freedom,resource endowment,geographical distance and institutional distance,and setting research hypotheses.In the empirical study,a panel model is constructed based on the facts of Chinese OFDI characteristics from 2009 to 2020,controlling for time fixed effects and using clustering robust standard errors to analyze the influence of the above factors on the location choice of Chinese OFDI.It is finally concluded that bilateral political relations,host country market size,and resource endowment have a facilitating effect on the location choice of Chinese OFDI,while host country political risk,tax burden,and geographical distance have an inhibiting effect on the location choice of Chinese OFDI.And the higher the political risk of the host country,the less the promoting effect of bilateral political relations on OFDI;the better the bilateral political relations,the less the inhibiting effect of political risk of the host country on OFDI.Then,in the case study,this paper analyzes the characteristics of CGNPC’s overseas direct investment by taking CGNPC’s overseas investment location choice as the research object,and analyzes the relationship between bilateral political relations and CGNPC’s overseas direct investment location choice by taking the UK market and ASEAN market as examples,and finally concludes that the changes in bilateral political relations have a strong influence on CGNPC’s overseas investment.However,CGNPC’s successful investment location choices show that responding to changes in bilateral political relations without relying entirely is the key for companies to find first opportunities in the post-crisis era crisis.Finally,based on the findings of the study,the government and the host country are called upon to establish and improve bilateral mechanisms for investment communication and coordination,improve early warning and guidance mechanisms for OFDI.Meanwhile,at the enterprise level,it is important to pay attention to the collection of information on current affairs,to take advantage of the promotion of bilateral political relations in light of the situation,and to enhance their own advantages and find appropriate development strategies.