A Probe into the Risks of Direct Investment in Countries along China's "the Belt and Road Initiative"

Abstract

In order to realize the effective allocation of international production factors and resources and build a community of interests between China and neighboring countries, a probe into the risk of China's direct investment in countries along the "the belt and road initiative" was put forward. Firstly, this paper discusses the overall situation of China's direct investment in countries along the "the belt and road initiative", and summarizes the characteristics of China's direct investment in countries along the ""from the aspects of investment location selection, industrial distribution, investment enterprises and investment methods. Secondly, referring to the traditional gravity model and production function, based on the panel data of 46 countries along the route from 2006 to 2016, a stochastic Frontier gravity model is constructed, and the full sample regression analysis is carried out by using Stata, Frontier and other software to make an empirical analysis on the factors that affect China's direct investment in countries along the route. The results show that: (1) China's direct investment in countries along the "the belt and road initiative" is developing rapidly, and the future investment trend is stable and positive; (2) The political environment of the host country and the situation of "energy saving and emission reduction" profoundly affect the efficiency and risk of China's direct investment in it. Based on the above conclusions and existing problems, this paper puts forward some countermeasures and suggestions to ensure the sustainability of the belt and road initiative.