Decoding the Voice: Media Variations in EPU and Foreign Capital Dynamics

Considering the heterogeneity of Chinese media, we first classify media into eight categories based on regional orientation and government affiliation and then construct corresponding Economic Policy Uncertainty (EPU) indices for each media type. We further examine the sensitivity and response of foreign direct investment (FDI) to the EPU indices reflected by different media types. Based on provincial panel data from China spanning 2005 to 2022, we find that although different EPU indices all exert a suppressive effect on FDI, the impact of EPU constructed from national mouthpiece media on FDI is weaker than that from national market-oriented media. Conversely, the EPU constructed from regional mouthpiece media has a generally stronger impact on FDI compared to that from regional metropolitan media. Our study demonstrates that the intensity of economic policy uncertainty reflected by different media varies, and foreign investors respond differently to these variations. This also underscores the subtle role of EPU in influencing FDI in China.