Geopolitical Uncertainty and China’s Outward Foreign Direct Investment in “Belt and Road” Countries

We construct three indicators for geopolitical uncertainty and assess their impacts on China’s outward foreign direct investment in “Belt and Road” countries. We find that a positive geoeconomic agglomeration distribution among host countries deters the amount of China’s FDI, and a differentiating distribution fosters China’s FDI endeavors. We also find that the closer the geoeconomic connectivity between the host country and China, the greater the volume of FDI flows from China to that host country. Our results further show that an increasingly competitive geoeconomic relationship between China and its FDI host nations corresponds to a higher influx of FDI. Additionally, we observe similar results for jobs created by China’s FDI as the outcome variable.