9 April 2019
Inquiry into FDI Pattern of China and the Economies along the Belt & Road
By Junrong Liu, Trans-Himalaya Studies Center, Leshan Normal University, Leshan, China
Yuan Liu, Trans-Himalaya Studies Center, Leshan Normal University, Leshan, China
This paper empirically analyzes the FDI Pattern of China and the other economies along the Belt & Road Initiative. The analysis results show that 1) the mutual FDI between China and the economies along the Belt & Road regions has continuously increased, and the mutual dependence of FDI continues to deepen, but there still is some imbalance existing in FDI dependence and distribution; 2) the Belt & Road Initiative has its objective material basis and subjective willingness for regional FDI cooperation; 3) China and the other economies along the Belt & Road Initiative, need to further utilize the complementary advantages in their industrial and economic structures for deepening the bilateral and multilateral FDI cooperation; 4) China and the countries along the Belt & Road need to clear the investment barriers and achieve a win-win situation for international investment and cooperation, in order to promote the continuous deepening of the Belt & Road Initiative and realize regional common prosperity.
Conclusion and Discussion
1) Obvious Growing Trend of Direct Investment of OBOR Regions with China
From above analyses, it is easy to sum up that the mutual direct investment between OBOR economies and China evidently grows up, which manifests OBOR promoting economic cooperation and evident complimentary advantage.
From the data of 2003-2014, increasing direct investment of the OBOR regions with China shows that the international economic cooperation has been gradually deepening and bilateral economic cooperation has been continually strengthening. Specifically, direct investment of OBOR regions with China also suggests that these countries have complementary advantages in the industry and in the consumer market, especially larger mutual direct investment scale and quick investment growth of China with 11 countries of the Southeast Asia and 19 countries of the western Asia and the Middle East, which are the main destinations of direct investment, with complementary advantages between regional and national, industry and market. The cooperation between China with ASEAN based on CAFTA “10 + 1” is an efficient platform for promoting the complementary advantages and international investment cooperation and providing a good demonstration effect for the OBOR. And analyses result still shows OBOR collaborative mechanism needs to be desired to enhance regional DI.
2) The Enhancing Investment Interdependence Level of China and OBOR Economies
Although investment dependence has regional imbalance, from the data of 2003-2014, the investment interdependence level of China and gradually increased. To be specific, China and 11 economies in Southeast Asia has the highest direct investment dependence on each other, while it has the lowest with 19 economies in Central and Eastern European. In overall, the trend of one-way investment dependence of the OBOR Economies to China is obviously rising, other region’s investment dependence on China is more apparent, except for the 19 economies in Central and Eastern Europe.
From the tendency of 2003-2014, China’s one-way investment dependence on OBOR is weakening. This is because of the reform and opening-up policy of China for nearly 30 years, which has comprehensive benefits of economic scale, economic structure, industrial structure, the domestic market and the policy itself, diversifying the sources of external direct investment and reducing INFDI’s dependence on a particular area. For 30 years, through a reform and opening policy, China has demonstrated a high FDI and FDI flows and scale, sharing the international investment cooperation and experience with countries along the OBOR.
In short, the FDI interdependence between OBOR economies and China is continuously strengthening. The mutual economic interdependence and mutual beneficial opportunity among the economies along OBOR have provided the objective and subjective foundation for OBOR promotion as well in their existence already.
Generally, summing-up, based on the above analysis, China and the countries along the OBOR have the foundation of the international investment cooperation. According to OBOR Initiative framework, countries in OBOR regions will benefit from the agreeable win-win and sharing cooperation in the aspects of industry cooperation, market cooperation, and financial cooperation and so on. The OBOR regional investment cooperation will optimize and promote the nations’ economic and industrial structure, and hence the people living-hood will be bettered off, and eventually lead to OBOR common prosperity with peaceful development and hence the regional peace would be warranted.
However, the coverage of Belt & Road is changing with more and more economies participation into the OBOR Initiative and FDI pattern studied in the article would change. And importantly, with deepening and promotion of BRI, the FDI pattern of China and the economies along Belt & Road will be optimized to the great extent, which needs further systematic researches on. The paper only provides a current scenario of the FDI pattern that manifests the subjective and objective foundation for BRI.