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The Empirics of China's Outward Direct Investment

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  • Yin-Wong Cheung

    (University of California, Santa Cruz)

  • XingWang Qian

    (SUNY, Buffalo State College)

Abstract

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.

Suggested Citation

  • Yin-Wong Cheung & XingWang Qian, 2009. "The Empirics of China's Outward Direct Investment," Working Papers 172009, Hong Kong Institute for Monetary Research.
  • Handle: RePEc:hkm:wpaper:172009
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    References listed on IDEAS

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    Keywords

    Market Seeking; Resources Seeking; Servicing Exports; International Reserves; Agglomeration Effect;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F36 - International Economics - - International Finance - - - Financial Aspects of Economic Integration
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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