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The Empirics of China's Outward Direct Investment

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  • Yin-Wong Cheung

    (University of California, Santa Cruz)

  • XingWang Qian

    (SUNY, Buffalo State College)

Abstract

We investigate the empirical determinants of China¡¦s outward direct investment (ODI). It is found that China¡¦s investments in developed and developing countries are driven by different sets of factors. Subject to the differences between developed and developing countries, there is evidence that a) both market seeking and resources seeking motives drive China¡¦s ODI, b) the Chinese exports to developing countries induce China¡¦s ODI, c) China¡¦s international reserves promote its ODI, and d) the Chinese capital tends to agglomerate among developed economies but diversify among developing economies. Similar results are obtained using alternative ODI data. We do not find substantial evidence that China invests in African and oil-producing countries mainly for their natural resources.

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Bibliographic Info

Paper provided by Hong Kong Institute for Monetary Research in its series Working Papers with number 172009.

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Length: 41 pages
Date of creation: May 2009
Date of revision:
Handle: RePEc:hkm:wpaper:172009

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Keywords: Market Seeking; Resources Seeking; Servicing Exports; International Reserves; Agglomeration Effect;

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References

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  1. Yin-Wong Cheung & Menzie D. Chinn & Eiji Fujii, 2010. "China's Current Account and Exchange Rate," NBER Chapters, in: China's Growing Role in World Trade, pages 231-271 National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. Fiodendji, Daniel Komlan, 2013. "Do Institutions Quality Affect FDI Inflows in Sub Saharan African Countries?," MPRA Paper 57414, University Library of Munich, Germany.
  2. Feiqiong Chen & Yangmin Xu, 2014. "Democratization in the host country and institutional risk of cross-border M&A: an empirical study on Chinese listed enterprises," Quality & Quantity: International Journal of Methodology, Springer, vol. 48(2), pages 1013-1025, March.
  3. Jaya Prakash Pradhan, 2010. "Strategic Asset-Seeking Activities of Emerging Multinationals: Perspectives of Foreign Acquisitions by Indian Pharmaceutical MNEs," Organizations and Markets in Emerging Economies, Faculty of Economics, Vilnius University, vol. 1(2).
  4. Shujie Yao & Pan Wang, . "Has China Displaced the Outward Investments of OECD Countries?," Discussion Papers 12/10, University of Nottingham, GEP.
  5. Pradhan, Jaya Prakash & Singh, Neelam, 2010. "Group Affiliation and Location of Indian Firms’ Foreign Acquisitions," MPRA Paper 24018, University Library of Munich, Germany.
  6. Jaya Prakash Pradhan, 2011. "Emerging Multinationals: A Comparison of Chinese and Indian Outward Foreign Direct Investment," Institutions and Economies (formerly known as International Journal of Institutions and Economies), Faculty of Economics and Administration, University of Malaya, Faculty of Economics and Administration, University of Malaya, vol. 3(1), pages 113-148, April.
  7. Dong, Baomin & Guo, Guixia, 2013. "A model of China's export strengthening outward FDI," China Economic Review, Elsevier, vol. 27(C), pages 208-226.
  8. Yao, Shujie & Wang, Pan, 2014. "Has China displaced the outward investments of OECD countries?," China Economic Review, Elsevier, vol. 28(C), pages 55-71.
  9. Amighini, Alessia A. & Franco, Chiara, 2013. "A sector perspective on Chinese outward FDI: The automotive case," China Economic Review, Elsevier, vol. 27(C), pages 148-161.
  10. Chou, Kuang-Hann & Chen, Chien-Hsun & Mai, Chao-Cheng, 2011. "The impact of third-country effects and economic integration on China's outward FDI," Economic Modelling, Elsevier, vol. 28(5), pages 2154-2163, September.
  11. Chao-Hsi Huang & Kai-Fang Teng & Pan-Long Tsai, 2010. "Inward and outward foreign direct investment and poverty: East Asia vs. Latin America," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 146(4), pages 763-779, December.

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