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Factors Influencing China’s Outward Foreign Direct Investment

Author

Listed:
  • Hsiu-Ling Wu

    (Hsiu-Ling Wu, Department of Economics, Soochow University, Taipei, Taiwan; e-mail: hlwu@scu.edu.tw)

  • Chien-Hsun Chen

    (Chien-Hsun Chen (corresponding author), Chung-Hua Institution for Economic Research, Taipei, Taiwan)

  • Yi-Rou Chen

    (Yi-Rou Chen, Graduate Institute of International Economics, National Chung-Cheng University, Chiayi County, Taiwan.)

Abstract

The main purpose of this study is to explore factors determining China’s outward FDI (OFDI), with particular emphasis on the unique characteristics of China’s economy during the period of institutional transformation. The empirical results obtained in the present study show that Chinese enterprises tend to invest in countries that have a mature economy. Exports have a significantly positive effect on China’s OFDI, with the relationship between OFDI and exports in China being a complementary one. The relationship between imports and OFDI for China is one of substitution, as Chinese enterprises have often relied upon the importation of key components as a means of acquiring the technology they need. Exchange rates, monopolistic advantage, foreign exchange reserves and the level of technology intensity, all have a significant impact on China’s OFDI, while the GDP growth rate and geographical distance have not had a significant impact. JEL Classification: F200, O160, P450

Suggested Citation

  • Hsiu-Ling Wu & Chien-Hsun Chen & Yi-Rou Chen, 2021. "Factors Influencing China’s Outward Foreign Direct Investment," Margin: The Journal of Applied Economic Research, National Council of Applied Economic Research, vol. 15(3), pages 299-319, August.
    • Handle: RePEc:sae:mareco:v:15:y:2021:i:3:p:299-319
    DOI: 10.1177/09738010211010368
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    References listed on IDEAS

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