Who damages whom? Chinese firms’ outward investment and the international reputation of China’s economic system

“A group of "princelings", children of China's political elite, has quietly urged the Communist Party leadership to release jailed Nobel laureate Liu Xiaobo on parole to improve the country's international image”1 . The news revealed by the Reuters press agency, if confirmed, adds a key element to the inside élite's debate on the country's reputation and its link with the high failure rate of overseas direct investments (ODI). Starting from December 2012, the Chinese perspective on its own outward investment experience has indeed undergone a change. Two elements, in particular, have prompted this change: a preliminary estimate of the “failure rate” of Chinese multinational investment and the gradual but relentless erosion of the country’s firm belief that developing countries would have extended a warm welcome to Chinese investments. The origin of the troubles faced by ODI has indeed become a top issue for State party officials, enterprise CEOs and economists as well. The emergence of divergent perspectives suggests that the block of interests that has often been identified behind Chinese investment is less homogeneous than it appears.