Make friends, not money: How Chinese enterprises select transport infrastructure investment locations along the Belt and Road

Since the 2013 launch of the Belt and Road Initiative (BRI), which has long been recognized as one of the most complex international cooperation activities, a large proportion of the 90 billion in Chinese foreign direct investment (FDI) in the regions constituting the BRI, has flowed into the transport infrastructure sector. Chinese enterprises select transport infrastructure locations as an effective way to mitigate the uncertainties associated with institutional voids in host countries that undermine the functioning of market institutions and expose investors to additional risks. Theoretically, drawing on institutional theory, we propose that bilateral diplomatic activities between host countries and China can serve as an effective risk-reduction mechanism, while institutional distance and common land borders have significant moderating effects on this process. Empirically, based on a unique set of data manually collected from the official website of the Ministry of Foreign Affairs of the People's Republic of China, our Poisson count regression and negative binomial regression analysis results generally confirm our hypotheses. Implications for both researchers and practitioners are discussed at the end of the paper.