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The impact of government policy on Chinese investment locations: An analysis of the Belt and Road policy announcement, host-country agreement, and sentiment

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  • Filip Beule

    (KU Leuven)

  • Haiyan Zhang

    (Neoma Business School)

Abstract

In today’s turbulent geopolitical landscape, scholars and policymakers have paid growing attention to the influence of geopolitics on foreign direct investments. We contribute to this literature by analyzing how the institutional and policy context influence Chinese greenfield investments in the context of the Belt and Road Initiative (BRI). As there is no consistency in host countries regarding China’s unilaterally announced BRI, we have investigated how host country policy agreement and sentiment have influenced their receptiveness and attractiveness to Chinese investors. We show that (1) a positive public opinion towards the BRI in the host country and (2) an official BRI Memorandum of Understanding between China and a host country both stimulate Chinese greenfield investment in a host country. We also find that these effects are disproportionately larger for Chinese state-owned enterprises than for private firms. Finally, we show that institutional distance negatively moderates these two effects.

Suggested Citation

  • Filip Beule & Haiyan Zhang, 2022. "The impact of government policy on Chinese investment locations: An analysis of the Belt and Road policy announcement, host-country agreement, and sentiment," Journal of International Business Policy, Palgrave Macmillan, vol. 5(2), pages 194-217, June.
    • Handle: RePEc:pal:joibpo:v:5:y:2022:i:2:d:10.1057_s42214-021-00129-2
    DOI: 10.1057/s42214-021-00129-2
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    2. Hui Wang & Xin Zhong, 2023. "An Empirical Study on the Impact of Chinese OFDI on the Global Value Chain Positions of Countries Along the Belt and Road and Threshold Effects," SAGE Open, , vol. 13(1), pages 21582440231, February.
    3. Xianjing Wang & Shouming Chen & Yueqi Wang, 2023. "The Impact of Corporate Social Responsibility on Speed of OFDI under the Belt and Road Initiative," Sustainability, MDPI, vol. 15(11), pages 1-16, May.
    4. Jiatao Li & Ari Van Assche & Xiaolan Fu & Lee Li & Gongming Qian, 2022. "The Belt and Road Initiative and international business policy: A kaleidoscopic perspective," Journal of International Business Policy, Palgrave Macmillan, vol. 5(2), pages 135-151, June.
    5. Li Yuanyuan, 2023. "Impacts of the Belt and Road Initiative on regional outward FDI from China based on evidence from 2000 to 2015," ZFW – Advances in Economic Geography, De Gruyter, vol. 67(1), pages 20-32, May.

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