Extant research has explicitly recognized the importance of the compatible environment in the context of globalization. Sister-city partnership has long been developed for the establishment of such a favorable environment to facilitate international investment. Using a panel data set that covers 66 Belt Road countries and 75 non-Belt Road countries from 2006 to 2017, we investigate the impact of sister-city relationship between China and her partner countries as well as its interactive effect with Chinas’ recent global home institution, BRI on the Chinese outward FDI. We find consistent evidence that both sister-city partnership and BRI promote the Chinese outward FDI while these effects are rather complementary than supplementary to each other. Further, we find that the positive impact of BRI seems to be more pronounced in privately owned enterprises (POE) rather than state-owned enterprises (SOE), which suggests that BRI at this stage is more market-oriented and less political-oriented. Our findings suggest that the policymakers should hold more open attitudes towards the establishment of sister-city partnership and towards the Belt Road Initiative to promote more Chinese outward foreign investment so as to deepen the bilateral economic cooperation.

With the implementation of the Belt and Road initiative, the development of trade governance between China and countries along the line has expanded. Firstly, this paper analyzes the impact of cultural exchanges through Confucius Institutes on regional trade cooperation from three dimensions: improving cultural identity, reducing trade costs and sharing information. Secondly, we utilise data trade data from the 64 countries along the line from 2004 to 2015 to examine the effects of Confucius Institutes in regional trade cooperation with China. Overall, we found that Confucius Institutes have significantly promoted the trade growth of China and those countries. Compared to exports, Confucius Institutes promote greater growth imports to the Belt and Road countries from China. Compared to countries in the Road, Confucius Institutes better promoted trade growth between China and countries in the Belt. This empirical conclusion stands under various robustness tests. Forth, after the 12th five-year-plan, the promoting effects of the Confucius Institute has been strengthening. Fifth, the smaller the cultural distance, the stronger the promoting effects of the Confucius Institute on the trade in BRI countries. However, the effect of language similarity is not significant. This study indicates that the Chinese government should pay more attention to the economic effects of cultural factors, such as the Confucius Institute, in policy design.

Does outward foreign direct investment (OFDI) create (or transfer) employment in (or from) the home country? To examine this question, we analyze how OFDI with different motivations influences employment in the home country, using micro data from 552 Chinese manufacturing enterprises investing abroad. We use two sets of indices, namely, the absolute employment amount and relative employment amount, and adopt a difference-in-differences methodology. Overall, we find that OFDI increases both the absolute and relative employment amount. In particular, market-seeking OFDI increases the absolute employment amount, but not the relative employment amount. Technology-seeking OFDI significantly promotes both absolute and relative employment amount of the parent firm in the home country, while resource-seeking and efficiency-seeking OFDI have no significant influence on employment at enterprises in the home country. The effect on home-country employment depends on the host country. Finally, investment in developed countries can significantly increase home-country employment, while investment in developing countries does not have a significant influence on home-country employment.