Research on the impact of China's OFDI on the trade competitiveness of countries along the Belt and Road

Based on the panel data of 30 countries along the Belt and Road Initiative (BRI) from 2007 to 2021, this paper innovatively analyzes the impact of China's foreign direct investment on the trade competitiveness of goods, manufacture and service products in these countries by using the fixed effects model. The revealed comparative advantage is selected as the indicator to measure the trade competitiveness of host countries, and it is used as the explained variable. The explanatory variable is the proportion of China's direct investment in the countries along the Belt and Road to the GDP of host countries, and the government efficiency, national export complexity, technology level, trade freedom and economic growth are selected as control variables. The results show that China's OFDI can have a positive impact on the trade competitiveness of countries along the Belt and Road. According to the empirical results, China's OFDI has a significant promotion effect on the trade competitiveness of general goods and service goods in countries along the Belt and Road. Although it has a negative effect on the trade competitiveness of manufacturing products, in the heterogeneity test of time-divided sample regression, the absolute value of its coefficient becomes smaller after the implementation of the Belt and Road policy. This shows that "The Belt and Road" policy improves the matching between OFDI and the host country's manufacturing industry through infrastructure investment, industrial policy coordination and technical cooperation, and reduces the negative impact of export substitution and competitive pressure.