On the Impact of “Sister City Relationship” on China's Outward Foreign Direct Investment: A Study Based on Evidences of BRI Participating Countries

Abstract

From the perspective of urban diplomacy, this paper takes the panel data of China's outward foreign direct investment in 47 “Belt and Road Initiative” countries from 2003 to 2017 as the research sample, and uses the dynamic GMM approach to examine the impact of “Sister City Relationship” on such investment. The study finds that: (1) Sister City Relationship promotes China's outward foreign direct investment in Belt and Road Initiative participating countries; (2) Sister City Relationship has diverse impact on attracting China's outward foreign direct investment in different continents and its facilitating role is more obvious in European countries; (3) Sister City Relationship can further strengthen the positive effect of overseas economic and trade cooperation zones on capacity cooperation with Belt and Road Initiative participating countries and China's outward foreign direct investment. Therefore, it is believed that Belt and Road Initiative participating countries should champion Sister City Relationship to enhance the exchanges and mutual learning between cities, set up investment promotion platforms, create new forms of cooperation and foreign investment, and accelerate opening-up in all respects.