Inquiry into FDI Pattern of China and the Economies along the Belt & Road

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.


Introduction and Previous Studies
The Belt and Road Initiative (hereinafter referred to as OBOR), a sub-region cooperation initiative, has been put forward by the Chinese government.The Initiative aims to create active economic partnership between OBOR Economies and China.OBOR, bannered with peaceful development, revives the historical and ancient Silk Road, by developing and evolving into a sub-regional community of interest, fate and responsibility with multilaterally political trust, economic integration and cultural inclusiveness.Foreign direct investment (FDI) has long been considered as the important content of financing which proves the nucleus agent driving ahead the cooperation of OBOR economies.Hence, the research on OBOR economies' FDI pattern and FDI dependence within OBOR regions enjoys very important significance, which is the main research content of this article.
Scholars have carried out extensive research on OBOR, especially in the study of China's direct investment in the countries along OBOR regions.The recent research of "direct investment in OBOR regions" mainly covers four aspects including evaluation of investment risk, location choice of investment, investment selection and the general investment pattern.
In the study of the general pattern, Ding Zhifan and Sun Genjin (2016) [20], Jin Fang (2016) [21], Dong Qin (2016) [22], Zheng Lei and Liu Zhigao (2015) [23] had a systematic study on re-layout of regional investment, promotion of direct investment, benefit sharing of international investment, and the motivations, mechanisms and measures of China's OFDI pattern reconstruction based on OBOR.
However, these studies mentioned above have considered China's direct investment in the countries along OBOR regions as a main research, they omitted the analyses of direct investment distribution of OBOR regions including China and the research on investment dependence between OBOR economies and China.This paper mainly analyses these omissions with exploring the feasibility and possibility of OBOR construction, which also illustrates that the direct in-DOI: 10.4236/ti.2018.93012J. R. Liu, Y. Liu vestment cooperation of China.These countries collectively form the regional common needs with an objective towards a multilateral win-win situation.2) Data Sources

Data Sources and Research Region
The total Outward FDI and Inward FDI data of all the economies are quoted from UNCTAD database.The mutual national investment data between China and OBOR Economies are collected from "Statistical Bulletin of China's Outward FDI" over the years.Meanwhile, the data of FDI of China is from the "China Statistical Yearbook" over the years.National GDP and the GDP growth rate are from the World Bank Data.

3) Research Region
The OBOR involves wide regions where in fact is no obvious boundary of geographical areas.For simply research, besides China, this paper uses the geographic definition of OBOR of Zou Jialing (2015) [24], categorizing the countries along the OBOR into six regions, including  1).  3, Figure 4).

Overview of OFDI and INFDI between China and OBOR Economies
It was easily observed that 11 economies in Southeast Asia obtain much higher flows of direct investment from China than other Countries (Figure 5, Figure 6).
China accounts for 50% -60% of total FDI in this region since the international financial crisis happened in 2008.Besides, China also provided 10%

Analysis on FDI Dependence between OBOR Economies and China
In the Formula (1), ured out the computational formula.We apply their formula to calculate relative investment dependence between the two countries.The equation is as follows: In the equation, w x and w ϕ are the world OUTFDI total amount and total INFDI.

HM Index Method
We use the HM Index (Hubness Measurement Index) constructed by Baldwin (2003) to measure the investment dependence between the routes of the OBOR and China.The Index calculation equation is as follows: In the equation: ϕ refers to the total FDI of country j in the routes Here, HM measures the level of country i's investment dependence on country j.HM takes range of values between 0 and 1.It denotes that the bigger HM is, the higher the level of country i's investment dependence on country j is and vice versa.

2) Absolute Investment Dependence of FDI between OBOR Economies and China
Based on the Equation (1), we can calculate the absolute investment dependence of FDI between China and OBOR Economies (Table A1).Calculated results indicate a general upward trend and an increasing absolute investment dependence, especially the highest level existing between China and 11 economies in Southeast Asia, followed by similar level between 8 Economies in South Asia, 19 economies in West Asia and Mid-East, and Russia and Mongolia.China and 5 economies in Central Asia have the lowest level of absolute investment dependence of FDI (Figure 7).
Broadly speaking, FDI interdependence between OBOR and China seems to be deepening.The majority of districts along OBOR are clearly interdependent with China.Particularly, FDI interdependence between Southeast Asia and China proves even more remarkable.Figure 7 shows that 2003-2014 witnessed a fluctuation of the FDI interdependence between OBOR and China, inconspicuously or intensely.The implications of the FDI interdependence between OBOR and China are obvious that OBOR regions is under economic integration process, and the economic connectivity between OBOR economies and China, has proven to be more and more robust.There have been some instances of discordances existing between OBOR economies and China, which have exerted negative impacts on international economic cooperation in OBOR regions in the short run.
3) Relative FDI Dependence of China and OBOR Economies

5) OBOR FDI Dependence on China
According to the Equation (3), we can calculate the levels of OBOR countries' FDI dependence on China (Table A4).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.

Conclusion and Discussion
2) The Enhancing Investment Interdependence Level of China and OBOR

Economies
Although investment dependence has regional imbalance, from the data of  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.

1 )
The Time Period of Data The article sets its investigation period from 2003-2014, because the availability of the China's out-ward FDI data to other individual economy only starts in "Statistical Bulletin of China's Outward FDI 2004" and we do think the series of 11 years in length is enough to display dynamic trends.

Figure 4 .
Figure 4. China's OFDI Stock Proportion Taken by OBOR Economies (2003-2014).Data Source: Calculated based on the original data from "Statistical Bulletin of China's Outward FDI" and UNCTAD.

ijx
refers to the total outward direct investment (OFDI) of country i to country j ji x refers to the total OFDI of country j to country i ij ϕ refers to the total inward direct investment (INFDI)accepted by country i from country j ji ϕ refers to the total INFDI accepted by country j from country i And herein hence ij ji j x refer to the total OFDI of country i and country j respectively i ϕ and j ϕ refer to the total INFDI accepted by country i and country j respectively ij D values between [0 -1.0], and 1.0 indicates the maximum investment dependence between the two countries i and j countries while 0 means minimum dependence.The Measure method of Relative Investment Dependence In fact, some scholars (Brown, 1949; Kojima, 1964; Drysdale and Garnaut, 1982; etc.) have created the concept of international trade dependence and fig-

ijx
refers to the total direct investment from country i into country j i x refers to the total FDI of country i ij ϕ refers to the total direct investment accepted by country i from country j in the routes DOI: 10.4236/ti.2018.93012168 Technology and Investment J. R. Liu, Y. Liu j

Figure 7 .
Figure 7. Absolute FDI Dependence of China and OBOR Economies.Data resource: Calculated according to the original data from "Statistical Bulletin of China's Outward FDI" and UNCTAD.-0.01

Figure 9 .
Figure 9. Trend of China's FDI Dependence on OBOR Economies.Data resource: Calculated according to the original data from "Statistical Bulletin of China's Outward FDI" and UNCTAD.
From 2003 to 2014, the FDI dependence of the countries on China has presented the obvious trend of rising since the global financial crisis of 2008.As shown in Figure 10, except the 19 economies in Central and Eastern Europe, the five regions had had high investment dependence level on China, especially the 11 economies in Southeast Asia have reached the highest level of FDI dependence on China.During the period, 8 Economies in South Asia, 19 economies in Central and Eastern Europe, Russia and Mongolia and 19 economies in West Asia and Mid-East have had similar level of FDI on China.The OBOR FDI Dependence on China demonstrates that OBOR FDI dependence on China shows a rising trend.Majority of districts in OBOR are apparently dependent on China.Particularly, Southeast Asia notably depends on China.Hence, as a rising economy, China has been becoming more and more important direct investment source, or OBOR economies have been being hotter and hotter DI (direct investment) destination.And OBOR economies need DI from China to promote their home economy.

Figure 10 .
Figure 10.Trend of OBOR Economies' FDI Dependence on China from 2003-2014.Data resource: Calculated according to the original data from "Statistical Bulletin of China's Outward FDI" and UNCTAD.
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.
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.
8 Economies in South Asia, 19 economies in Central and Eastern Europe, 11 economies in Southeast Asia, 5 economies in Central Asia, Russia and Mongolia, 19 economies in West Asia and Mid-East (Table
DOI: 10.4236/ti.2018.93012164 Technology and Investment J. R. Liu, Y. Liu 2) Dynamic Analysis on China's Direct Investment in OBOR Economies Based on the calculation in Excel 2011 software (the same in following calculations), the 11 economies in Southeast Asia attracted 40% to 50% of FDI stocks from China with the fastest growth, while China's direct investment went up slowly in other regions but increased yearly, which all accounts for 10% to 15% with 19 economies in Central and Eastern Europe excluded (Figure

Table 2 .
The Mutual Direct Investment between OBOR Economies and China (2014).
Data Source: Calculated based on the original data from "Statistical Bulletin of China's Outward FDI" and UNCTAD.Figure 6.China's OFDI Flow Proportion Taken by OBOR Districts (2003-2014) Data Source: Calculated based on the original data from "Statistical Bulletin of China's Outward FDI" and UNCTAD.Unit: Ten thousand USD.In terms of stocks (

Table 2 )
, the 11 economies in Southeast Asia occupy 53.07%, followed by Russia and Mongolia, 5 economies in Central Asia, 19 economies in West Asia and Mid-East with accounting for 13.87%, 11.24% and 10.67%.While 19 economies in Central and Eastern Europe takes up only 1.88%.
The Measure method of Absolute Investment Dependence We adapt FDI share index to measure the absolute dependence of direct investment among OBOR Economies (China included).FDI share index can comprehensively reflect the influence of OFDI and INFDI, and computation equation is as follows: Based on the Equation (2), we can calculate the relative investment dependence of FDI between China and OBOR Economies shown in TableA2.In terms of long-term trend, calculated results indicate a general upward trend with fluctuating in relative investment dependence level, especially the highest one existed between China and 11 economies in Southeast Asia.There are similar le-After analyzing the relative investment dependence of FDI between China and OBOR Economies, in order to understand precisely the level of dependence, we used HM index to calculate the one-way dependence of China on the countries or the countries on China shown in TableA3.According to the Equation (3), we can calculate the levels of China's FDI dependence on OBOR Economies.As shown in Figure9, China has the highest level of FDI dependence on the 11 economies in Southeast Asia, then on the 19 economies in West Asia and Mid-East, with comparatively low level on the other regions.The trend of China's FDI dependence on OBOR Economies has plunged from 2003 to 2014.
To sum up, China's FDI Dependence on OBOR shows that the trend of China's FDI dependence on the districts along OBOR is downward.China notably depends on Southeast Asia in FDI.This shows that China has got far-reaching development economically, and the INFDI policies were under adjustment from merely accepting to screening INFDI to meet the renewed economical and industrial structure requirement.With significant economic enhancement, China's optimizing investment climate and rising market opportunities attract multi-FDI-sources to China.And China's economical and industrial adjustment and upgrading caused short-run partially non-adaptive effect on OFDI of OBOR to China.Figure 8. Trend of Relative FDI Dependence between China and OBOR Economies.Data resource: Calculated according to the original data from "Statistical Bulletin of China's Outward FDI" and UNCTAD.

Table A2 .
Relative Investment Dependence of FDI between China and OBOR Economies.
Data resource: Calculated according to the original data.DOI: 10.4236/ti.2018.93012176 Technology and Investment J. R. Liu, Y. Liu
Data resource: Calculated according to the original data.

Table A4 .
OBOR Economies' FDI Dependence on China (Base on the World).