Can The Belt And Road Initiative Solve The Problem Of Overcapacity In China?

In 2013,General Secretary Xi Jinping focused on the development trend of China and the world and then raised the initiative of jointly building the Silk Road Economic Belt and the 21st-Century Maritime Silk Road,that is,the Belt and Road Initiative.The Belt and Road Initiative provides an international cooperation platform with good prospects for development for the countries along the Belt and Road and even the world,it also boosts the capacity cooperation between China and the other countries along the route.Besides,it encourages Chinese enterprises to go global and provides new ideas for manufacturing enterprises to solve the problem of overcapacity.The countries and regions along the Belt and Road are mainly emerging countries and developing countries.They need a lot of infrastructure construction in the process of urbanization and industrialization.As a manufacturing power,China has a complete industrial system.In the face of the needs of industrialization of the countries along the route,China can promote the international capacity cooperation under the Belt and Road Initiative,and directly transfer the excess capacity in China to the countries with lack of capacity,thus directly alleviating the problem of overcapacity in China.However,there are many countries along the Belt and Road.When Chinese enterprises invest in the countries along the route,they will not only face the competition of the international market,but also face various risks such as political turmoil,religious conflicts,incomplete legal system and debt default in the host country.In addition,the cooperation projects of the Belt and Road Initiative have a long cycle,a large amount of investment and a low return on investment.Therefore,it is still uncertain whether China can use the Belt and Road platform to carry out capacity cooperation with the countries along the route,and directly transfer the surplus capacity to these countries,so as to solve the problem of overcapacity in China.This paper takes the A-share listed manufacturing enterprises from 2007 to 2020 as the research sample,takes the Belt and Road Initiative as the policy shock event,and uses the DID model to test whether enterprises can alleviate the excess capacity by investing in countries or regions along the Belt and Road.The research found that compared with the control group,the manufacturing enterprises that actively go out and invest in related countries have indeed alleviated the excess capacity,but the impact of the Belt and Road Initiative on overcapacity tended to increase firstly and then decrease over time.Subsequently,a series of robustness tests were carried out.Although the treatment group and the control group passed the parallel trend test,it was found from the parallel trend test line chart that the policy dynamic effect began to decline from 2009.In order to avoid the possibility that the decline in the excess capacity of the treatment group was caused by other reasons rather than the Belt and Road Initiative,this paper conducted a placebo test,setting the sample interval to 2006-2013 and taking 2009 as the virtual policy shock time,but the coefficient of the interaction item was not significant,indicating that the baseline regression result was not caused by other random factors and passed the placebo test.Subsequently,in order to exclude the possibility that the treatment group enterprises can effectively alleviate the excess capacity only because of OFDI,not affected by the Belt and Road Initiative,this paper changed the partition method of the control group while keeping the treatment group unchanged-enterprises with outward direct investment behavior and investment destinations not in the 65 countries and regions along the Belt and Road were taken as the corresponding control group,and the results were still significantly negative.Finally,this paper conducted a heterogeneity test on manufacturing enterprises from the perspectives of property rights,industry characteristics and whether the enterprises belong to the key provinces of the Belt and Road Initiative.The results show that:Firstly,under the Belt and Road Initiative,both state-owned enterprises and non-state-owned enterprises can alleviate the excess capacity through outward direct investment,but the Belt and Road Initiative is more effective for non-state-owned enterprises to alleviate the excess capacity.Secondly,the Belt and Road Initiative can help both light industry and heavy industry enterprises to alleviate a certain degree of excess capacity,but compared with heavy industry with higher excess capacity,light industry enterprises are more able to reduce the excess capacity level by investing in countries and regions along the Belt and Road.Thirdly,compared with enterprises in non-key provinces of the Belt and Road construction,the Belt and Road Initiative can significantly and effectively alleviate the excess capacity problem of manufacturing enterprises in the key provinces of the Belt and Road construction.Through the heterogeneity analysis,the following questions can be answered directly or indirectly:Firstly,although state-owned enterprises have the advantage of taking the lead,non-state-owned enterprises should also actively go global.Secondly,China’s partnership with relevant countries and regions is not to transfer China’s backward production capacity,but to carry out all-round capacity cooperation based on the complementary needs of both parties.Thirdly,although all provinces and cities have issued special plans and implementation plans after the Belt and Road Initiative was proposed,but the overcapacity of enterprises in key construction provinces of the Belt and Road has been significantly improved,which has put forward higher requirements for governments in other non-key provinces and cities to formulate reasonable plans and effectively introduce relevant policies to help local enterprises enter the global markets in various forms when participating in the Belt and Road construction in accordance with their own geographical,resource and economic advantages.