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The Empirics of China's Outward Direct Investment

  • Yin-Wong Cheung

    (University of California, Santa Cruz)

  • XingWang Qian

    (SUNY, Buffalo State College)

We investigate the empirical determinants of China¡¦s outward direct investment (ODI). It is found that China¡¦s investments in developed and developing countries are driven by different sets of factors. Subject to the differences between developed and developing countries, there is evidence that a) both market seeking and resources seeking motives drive China¡¦s ODI, b) the Chinese exports to developing countries induce China¡¦s ODI, c) China¡¦s international reserves promote its ODI, and d) the Chinese capital tends to agglomerate among developed economies but diversify among developing economies. Similar results are obtained using alternative ODI data. We do not find substantial evidence that China invests in African and oil-producing countries mainly for their natural resources.

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Paper provided by Hong Kong Institute for Monetary Research in its series Working Papers with number 172009.

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Length: 41 pages
Date of creation: May 2009
Date of revision:
Handle: RePEc:hkm:wpaper:172009
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