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China’s Regulatory Framework for Outward Foreign Direct Investment

Author

Listed:
  • Karl P. Sauvant

    (Columbia University and University of North Carolina)

  • Victor Zitian Chen

Abstract

China has become the world’s third largest outward investor, behind the United States and Japan. A growing body of literature suggests that China’s regulatory framework for outward foreign direct investment (OFDI) is a determinant of the country’s rising OFDI. This paper presents a holistic review of that framework, including some possibilities for its improvement. Overall, China’s framework serves two objectives : to help Chinese firms become more competitive internationally and to assist the country in its development effort. In pursuing these objectives, the regulatory framework has moved from restricting, to facilitating, to supporting, to encouraging OFDI; but there are still strong elements of administrative control that make it cumbersome. State-owned enterprises (SOEs) seem to benefit particularly from the current framework when internationalizing through FDI.

Suggested Citation

  • Karl P. Sauvant & Victor Zitian Chen, 2013. "China’s Regulatory Framework for Outward Foreign Direct Investment," EABER Working Papers 23749, East Asian Bureau of Economic Research.
  • Handle: RePEc:eab:wpaper:23749
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    File URL: http://www.eaber.org/node/23749
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    Cited by:

    1. repec:taf:applec:v:49:y:2017:i:42:p:4231-4240 is not listed on IDEAS
    2. Christian Dreger & Yun Schüler-Zhou & Margot Schüller, 2017. "Determinants of Chinese direct investments in the European Union," Applied Economics, Taylor & Francis Journals, vol. 49(42), pages 4231-4240, September.

    More about this item

    Keywords

    China; Outward foreign direct investment; OFDI; formal institutions; government;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • H1 - Public Economics - - Structure and Scope of Government
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H3 - Public Economics - - Fiscal Policies and Behavior of Economic Agents
    • K2 - Law and Economics - - Regulation and Business Law
    • K3 - Law and Economics - - Other Substantive Areas of Law
    • M16 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - International Business Administration
    • P33 - Economic Systems - - Socialist Institutions and Their Transitions - - - International Trade, Finance, Investment, Relations, and Aid

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