The Impact of Macro-tax Burden on China’s Outward Foreign Direct Investment—An Study Based on China Provincial Dynamic Panel System GMM Method

Abstract

Based on the provincial panel data of China from 2004 to 2017, the relationship between macro-level tax burden and China’s outward foreign direct investment (OFDI) is investigated by using the system Generalized Matrix estimation (SYS-GMM) of dynamic panel data. The results show that the macro-level tax burden has a significant promoting effect on OFDI. Finally, this paper argues that the government should implement structural tax reduction, clean up and standardize government charges, and cancel unreasonable charges in order to reduce the burden of enterprises and prevent the large-scale outflow of OFDI.