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Exchange rate appreciation and outward FDI in China

Author

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  • Fan Feng
  • Fa-qin Lin
  • Tang-you Wang

Abstract

This study analysed the impact of appreciation of the renminbi (RMB) on China's outward foreign direct investment (OFDI) on a theoretical and empirical basis. Based on theoretical analysis, we found that the appreciation of RMB can promote OFDI, as it can lower the threshold for foreign direct investment. Then, by constructing export-weighted effective exchange rates, we found that for every 1% appreciation of the RMB, the probability of enterprises engaging in OFDI increased by 0.0069 over 2001–2012.

Suggested Citation

  • Fan Feng & Fa-qin Lin & Tang-you Wang, 2022. "Exchange rate appreciation and outward FDI in China," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 31(7), pages 995-1016, October.
    • Handle: RePEc:taf:jitecd:v:31:y:2022:i:7:p:995-1016
    DOI: 10.1080/09638199.2022.2050782
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    Cited by:

    1. Zhang, Wenyue & Li, Jianan & Sun, Chuanwang, 2022. "The impact of OFDI reverse technology spillovers on China's energy intensity: Analysis of provincial panel data," Energy Economics, Elsevier, vol. 116(C).

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