THE IMPACT OF BUSINESS ENVIRONMENT QUALITY IN BELT AND ROAD INITIATIVE COUNTRIES ON CHINA'S OUTWARD FOREIGN DIRECT INVESTMENT

This article examines how investment facilitation levels in Belt and Road Initiative countries influence China's outward foreign direct investment. As a major source of global outward investment, China's investment activities are shaped by varying levels of investment facilitation across different countries. Current research has two key limitations: it fails to fully consider the Belt and Road Initiative's implementation timeline and overlooks countries' distinct investment openness characteristics. To address these gaps, this study analyzes data from 58 Belt and Road countries from 2008–2024 and business environment data from 2023. The study quantifies investment facilitation levels using business environment indicators, categorizes countries by facilitation level, and employs an extended gravity model for empirical analysis. The findings show that enhanced investment facilitation in Belt and Road countries significantly increases China's outward foreign direct investment. However, the impact remains consistent before and after the Initiative's launch—likely due to ongoing implementation, regional political instability, and economic development disparities among participating countries. Analysis of countries grouped by investment openness reveals varied effects: improved facilitation significantly promotes Chinese investment in countries with low investment openness, has limited impact in countries with medium openness, and shows strong promotional effects in countries with high openness. Based on these findings, this paper recommends: (1) advancing investment facilitation negotiations, strengthening border management, simplifying administrative approvals, and aligning with international standards; (2) deepening trade and investment cooperation, raising project thresholds, promoting enterprise transformation, and developing new cooperation models like online exhibition halls; (3) fostering "Two Countries, Two Parks" construction between Belt and Road countries and China to demonstrate successful cooperation; (4) enhancing institutional development, optimizing business environments, boosting competitiveness, and establishing efficient government-enterprise information exchange; (5) strengthening rule of law, resolving SME approval issues, and refining regulations; and (6) implementing differentiated strategies based on investment openness—prioritizing business environment optimization for countries with low and high openness, while encouraging medium-openness countries to enhance risk management and international cooperation. These recommendations aim to promote investment cooperation between China and Belt and Road countries, fostering mutual benefits and shared development.