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In the past few years, China has experienced a rapid development of foreign direct investment (FDI) in the Association of Southeast Asian Nations (ASEAN.) In particular, the formation of CAFTA (the China--ASEAN Free Trade Area) will greatly encourage Chinese multinational corporations to "go out" and invest in ASEAN. However, the South China Sea disputes between China and several ASEAN countries have increased the political risks of China's FDI in ASEAN. This paper starts with an analysis of the political risks of China's FDI in ASEAN against the background of the South China Sea disputes, explains how to view and assess these political risks, and then comes up with a systematic and comprehensive mechanism for coping with the political risks of China's FDI in ASEAN against the background of the South China Sea disputes. [ABSTRACT FROM AUTHOR]