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China’s outward foreign direct investment in energy sector: The role of “intimate” relations between countries

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  • Na Tan
  • Liang Chang
  • Rui Guo

Abstract

Based on the data of China’s outward foreign direct investment (OFDI) in energy sector to 133 countries from 2005 to 2014, this paper uses a gravity model to investigate the impact of “intimate” relations on China’s OFDI locations in energy sector. We find that the “intimate” relations have significant effects on China’s OFDI locations in energy sector, namely: bilateral senior leaders’ visits, institutional distance, genetic distance, and immigration. Holding other factors fixed, for each one more bilateral senior leaders’ visit between China and the host country, China’s OFDI in energy sector for the host country will increase by 5.44%. If the genetic distance from China and host country increases by 1%, China’s OFDI in energy sector will fall by 1.69%. For every 1% increase in the institutional distance between China and host country, China’s energy OFDI will decrease by 1.09%. For every 1% increase in a country’s immigration to China, China’s energy OFDI will increase by 0.46%. Further, after distinguishing developed and developing countries, we find that compared with developed countries, “intimate” relations have greater impacts on China’s energy OFDI in developing countries. Finally, based on the dominance analysis, considering China’s “intimate” relations with countries along the “Belt and Road” and current locations of China’s OFDI, we find that China should further expand energy investment in countries along the “Belt and Road”.

Suggested Citation

  • Na Tan & Liang Chang & Rui Guo, 2021. "China’s outward foreign direct investment in energy sector: The role of “intimate” relations between countries," PLOS ONE, Public Library of Science, vol. 16(7), pages 1-21, July.
  • Handle: RePEc:plo:pone00:0254199
    DOI: 10.1371/journal.pone.0254199
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    References listed on IDEAS

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    1. Sarah Y. Tong, 2005. "Ethnic Networks in FDI and the Impact of Institutional Development," Review of Development Economics, Wiley Blackwell, vol. 9(4), pages 563-580, November.
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    3. Zhao, Yong & Shi, Xunpeng & Song, Feng, 2020. "Has Chinese outward foreign direct investment in energy enhanced China's energy security?," Energy Policy, Elsevier, vol. 146(C).
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