A Spatial Econometric Study of the Impact of the RMB Exchange Rate on China's Foreign Direct Investment—Taking Countries along

doi:10.16716/j.cnki.65-1030/f.2021.02.007

Abstract

Abstract: China's direct investment in countries along the "Belt and Road" is relatively risky, and operating risks caused by changes in the RMB exchange rate are one of them. This paper selects 44 countries along "the Belt and Road" to construct a spatial econometric model using panel data from 2003 to 2018, and uses stata15.0 and matlab2018 software to empirically test the impact of the RMB exchange rate on China' s OFDI. The results show that the appreciation of the renminbi significantly promotes China's OFDI in countries along the route; the size of the host country's market, the level of openness, and the degree of corruption control are important factors affecting China's OFDI; China's OFDI in countries along "the Belt and Road" is spatially related and there is a positive third country effect. The paper suggests that Chinese companies should pay attention to the risk of RMB exchange rate changes and reasonably use hedging tools; it is recommended to consider the market size, openness and corruption control levels of countries along the route, select key countries and formulate appropriate investment plans; optimize the space for key countries along the route layout, realize the spatial agglomeration of OFDI around key industries, and form the industrial chain cooperation of countries along the route.

Key words: "the Belt and Road" Initiatives, RMB Exchange Rate, China's OFDI, Countries along"the Belt and Road", International Economic and Trade Cooperation, Third Country Effect, Silk Road Economy

CLC Number:

F832.6
F125

Hu Ying, Sun Di. A Spatial Econometric Study of the Impact of the RMB Exchange Rate on China's Foreign Direct Investment—Taking Countries along"the Belt and Road"as an Example[J]. Finance & Economics of Xinjiang, 2021, (2): 71-80.

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A Spatial Econometric Study of the Impact of the RMB Exchange Rate on China's Foreign Direct Investment—Taking Countries along"the Belt and Road"as an Example

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