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Japanese FDI in China - Determinants and performance

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  • Shiro Armstrong

    (Australia Japan Research Centre)

Abstract

Japanese foreign direct investment (FDI) into China is analysed using an FDI model that accounts for different modes of FDI as well as third country effects and adds to existing literature by incorporating a new measurement of political distance. Political closeness between countries is shown to affect FDI. An improvement in political relations is associated with an increase in FDI by reducing uncertainty in the investment environment. The performance of Japanese FDI into China is shown to be high relative to its potential since the late 1980s. The signing of the bilateral investment treaty in 1988 and Chinas WTO accession in 2001 were events that helped reduce uncertainty in bilateral investment, with the latter mitigating the effects of increased uncertainty from rising bilateral political tensions after 2001.

Suggested Citation

  • Shiro Armstrong, 2009. "Japanese FDI in China - Determinants and performance," Finance Working Papers 22311, East Asian Bureau of Economic Research.
    • Handle: RePEc:eab:financ:22311
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    Citations

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    Cited by:

    1. Ronald B. Davies & Rodolphe Desbordes & Anna Ray, 2015. "Greenfield versus Merger \& Acquisition FDI: Same Wine, Different Bottles?," The Institute for International Integration Studies Discussion Paper Series iiisdp469, IIIS.
    2. María C. Latorre & Nobuhiro Hosoe, 2014. "How much can foreign multinationals affect the Chinese economy? A dynamic general equilibrium analysis of Japanese FDI," GRIPS Discussion Papers 14-16, National Graduate Institute for Policy Studies.
    3. Latorre, María C. & Hosoe, Nobuhiro, 2016. "The role of Japanese FDI in China," Journal of Policy Modeling, Elsevier, vol. 38(2), pages 226-241.
    4. Ronald B. Davies & Rodolphe Desbordes & Anna Ray, 2015. "Greenfield versus Merger & Acquisition FDI: Same Wine, Different Bottles?," Working Papers halshs-01122659, HAL.

    More about this item

    Keywords

    FDI; foreign direct investment; Japan; China;

    JEL classification:

    • F15 - International Economics - - Trade - - - Economic Integration
    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements

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