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Byways and Highways of Direct Investment: China and the Offshore World

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  • William Vlcek

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Abstract

This paper examines a lacuna in the literature on foreign direct investment (FDI) flows to China: the absence of analysis for the prominent location of small Caribbean and Pacific islands as leading sources of FDI. An indeterminate amount of domestic capital is embedded in these FDI flows, which distorts comparative studies on FDI in developing economies between China and other states. Direct investment from China has also increased in recent years and offshore financial centres (OFCs) often serve as the initial destinations. This paper excavates the rationales behind the presence of OFCs and suggests that Chinese actors will emulate the practices of developed state multinational corporations and high-net-worth individuals. The implications of these investment practices are outlined along with possible trajectories for their impact on the process of financial liberalisation in China. Consequently, it encourages increased Chinese participation in the development of global financial governance.

Suggested Citation

  • William Vlcek, 2010. "Byways and Highways of Direct Investment: China and the Offshore World," Journal of Current Chinese Affairs - China aktuell, Institute of Asian Studies, GIGA German Institute of Global and Area Studies, Hamburg, vol. 39(4), pages 111-142.
  • Handle: RePEc:gig:chaktu:v:39:y:2010:i:4:p:111-142
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    File URL: http://hup.sub.uni-hamburg.de/giga/jcca/article/view/359
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    References listed on IDEAS

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    1. Murali Patibandla, 2007. "Pattern of foreign direct investment in developing economies: a comparative analysis of China and India," International Journal of Management and Decision Making, Inderscience Enterprises Ltd, vol. 8(2/3/4), pages 356-377.
    2. Schenk, Catherine R., 2002. "Banks and the emergence of Hong Kong as an international financial center," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 12(4-5), pages 321-340.
    3. Oral H. Williams & Esther C. Suss & Chandima Mendis, 2005. "Offshore Financial Centres in the Caribbean: Prospects in a New Environment," The World Economy, Wiley Blackwell, vol. 28(8), pages 1173-1188, August.
    4. Schenk, Catherine R., 1998. "The Origins of the Eurodollar Market in London: 1955-1963," Explorations in Economic History, Elsevier, vol. 35(2), pages 221-238, April.
    5. Hampton, Mark P. & Christensen, John, 2002. "Offshore Pariahs? Small Island Economies, Tax Havens, and the Re-configuration of Global Finance," World Development, Elsevier, vol. 30(9), pages 1657-1673, September.
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