Military Presence and Risk Mitigation: The Impact of U.S. Overseas Deployments on Chinese Firms' Foreign Direct Investment

U.S. overseas military deployments, as a strategic instrument for maintaining hegemony, structurally reconfigure international capital flows through a security‐economy nexus. While prior studies focus on host‐country perspectives, the third‐party economic spillovers of such deployments remain underexplored. This study investigates how they affect Chinese multinationals' foreign direct investment. The findings reveal a significant negative impact of U.S. military presence on Chinese FDI in host countries. Mechanism tests identify two channels: (1) institutional erosion—U.S. security patronage undermines host‐state governance, elevating political risk premiums that deter Chinese investment; (2) strategic anchoring—military presence strains host countries' relations with China, coupled with deep U.S. economic entrenchment, crowds out Chinese capital through both political and market channels. Heterogeneity analysis reinforces this logic. At the micro level, U.S. deployments heighten Chinese managers' perception of geopolitical risk, reshaping their attention allocation and subsequent investment decisions. These findings suggest that U.S. military retrenchment may reshape the strategic calculus of China's outward investment. By extending traditional FDI risk theory, this paper contributes to a nuanced understanding of the spillover effects of U.S. foreign military strategy amid great‐power competition, offering critical insights into the strategic value of the Belt and Road Initiative and guidance for Chinese firms seeking to reposition their global investment footprint.