War risk, risk aversion motivations, and China's energy investment in Belt and Road countries: evidence from the Russia-Ukraine conflict

This study investigates the impact of the Russia-Ukraine conflict on Chinese enterprises' overseas energy investments, focusing on how geopolitical risks shape investment decisions. Using a Difference-in-Differences (DID) approach and data from 2014 to 2023, the research examines whether the conflict has driven Chinese firms to reallocate energy investments to mitigate disruptions to China's energy supply. The findings reveal a significant increase in China's energy investments in Belt and Road Initiative (BRI) countries, reflecting a strategic shift toward politically stable and economically viable regions, driven by risk aversion motives. This trend is consistent across various tests. The study also explores heterogeneity in investment behavior, state-owned enterprises and investments in new energy, particularly renewables. Mechanism analysis highlights China-host relations, infrastructure aid, and non-greenfield controls as key shift drivers. Research shows Chinese firms adopt risk-averse strategies to secure energy, offering insights for policymakers amid geopolitical market uncertainties.