Based on the data of China’s outward foreign direct investment (OFDI) in energy sector to 133 countries from 2005 to 2014, this paper uses a gravity model to investigate the impact of “intimate” relations on China’s OFDI locations in energy sector. We find that the “intimate” relations have significant effects on China’s OFDI locations in energy sector, namely: bilateral senior leaders’ visits, institutional distance, genetic distance, and immigration. Holding other factors fixed, for each one more bilateral senior leaders’ visit between China and the host country, China’s OFDI in energy sector for the host country will increase by 5.44%. If the genetic distance from China and host country increases by 1%, China’s OFDI in energy sector will fall by 1.69%. For every 1% increase in the institutional distance between China and host country, China’s energy OFDI will decrease by 1.09%. For every 1% increase in a country’s immigration to China, China’s energy OFDI will increase by 0.46%. Further, after distinguishing developed and developing countries, we find that compared with developed countries, “intimate” relations have greater impacts on China’s energy OFDI in developing countries. Finally, based on the dominance analysis, considering China’s “intimate” relations with countries along the “Belt and Road” and current locations of China’s OFDI, we find that China should further expand energy investment in countries along the “Belt and Road”.
The Trend of Reduced Chinese Investments in the Belt and Road Initiative: Spending Contentions and Preparations for an Upcoming Financial Crisis
