Abstract: The paper empirically studies China′s investment efficiency and potential to the countries along “Belt and Road”, vertically analyzes the dynamic trend of direct investment potential, and horizontally compares direct investment potential differences in different income levels of countries. Investment efficiency loss of China′s direct investment to countries along “Belt and Road” mainly comes from “non- efficiency” factor, and investment efficiency is generally low, showing obvious regional difference and individual difference; direct investment potential is great, showing the characteristics of “convergence”. Investment freedom, rule of law and level of democracy are the main reasons for investment inefficiency, hindering China′s direct investment to countries along “Belt and Road”; WTO, OECD, SCO, FTA, BIT, trade degree of dependency, control of corruption, government effectiveness and regulatory quality are major factors to promote Chinese direct investment to these countries. The direct investment potential between countries along “Belt and Road” with different income levels varies greatly. As the income level increases, investment efficiency decreases and investment potential increases.

Key words: “Belt and Road”, direct investment efficiency, investment potential, Stochastic Frontier Gravity Model