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Going global: understanding China's outward foreign direct investment from motivational and institutional perspectives

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  • Canfei He
  • Xiuzhen Xie
  • Shengjun Zhu

Abstract

Using recent Chinese data on outward foreign direct investment (OFDI) (2003-11), this study shows that Chinese OFDI has expanded in both distant developing and developed countries. Statistical analysis suggests that Chinese investors are attracted to countries with large market size, rich resources and strategic assets, and demand a sound legal system but avoid countries with the best rule of law. Chinese investors do not directly respond to political risk and corruption. However, they favour politically stable locations when seeking markets and care about political stability and corruption control when seeking resources. Institutional factors play a more significant role in the investment decision making prior to the actual investments, but the moderating role of institutions is influential for the actual investments. Chinese investors are more likely to seek markets and resources in developing countries, with careful evaluation of institutional quality.

Suggested Citation

  • Canfei He & Xiuzhen Xie & Shengjun Zhu, 2015. "Going global: understanding China's outward foreign direct investment from motivational and institutional perspectives," Post-Communist Economies, Taylor & Francis Journals, vol. 27(4), pages 448-471, December.
    • Handle: RePEc:taf:pocoec:v:27:y:2015:i:4:p:448-471
    DOI: 10.1080/14631377.2015.1084716
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    Cited by:

    1. L. Arturo Bernal Ponce & Ricardo Pérez Navarro & Mauricio Ramírez Grajeda, 2020. "Causality between Chinese investment in Latin America and the governance indicators," Competition and Regulation in Network Industries, , vol. 21(1), pages 6-17, March.
    2. Filip Beule & Haiyan Zhang, 2022. "The impact of government policy on Chinese investment locations: An analysis of the Belt and Road policy announcement, host-country agreement, and sentiment," Journal of International Business Policy, Palgrave Macmillan, vol. 5(2), pages 194-217, June.
    3. Liu, Yuli & Ge, Yuejing & Hu, Zhiding & Wang, Shufang, 2018. "Culture and capital flows—Exploring the spatial differentiation of China's OFDI," China Economic Review, Elsevier, vol. 48(C), pages 27-45.
    4. Lisha He & Mia M Bennett & Ronghao Jiang, 2022. "The uneven geography of real estate investment by Mainland Chinese state-owned and private enterprises in the U.S.: Local market conditions, migration, and ethnic networks," Environment and Planning A, , vol. 54(4), pages 653-675, June.
    5. Ruilin Yang & Harald Bathelt, 2022. "China's outward investment activity: Ambiguous findings in the literature and empirical trends in greenfield investments," Growth and Change, Wiley Blackwell, vol. 53(1), pages 313-341, March.
    6. Vukicevic, Jelena & Fallon, Grahame & Ott, Ursula F., 2021. "A theoretical and empirical investigation into investment activities of technologically-intensive Chinese state-owned enterprises in the UK," International Business Review, Elsevier, vol. 30(1).
    7. Lv, Ping & Curran, Louise & Spigarelli, Francesca & Barbieri, Elisa, 2021. "One country, many industries: Heterogeneity of Chinese OFDI motivations at meso level," China Economic Review, Elsevier, vol. 69(C).
    8. Lisha He & Ronghao Jiang & Mia M. Bennett, 2020. "The rise of Chinese foreign direct investment in the United States: Disentangling investment strategies of state‐owned and private enterprises," Growth and Change, Wiley Blackwell, vol. 51(4), pages 1562-1587, December.
    9. Schulhof, Vera & van Vuuren, Detlef & Kirchherr, Julian, 2022. "The Belt and Road Initiative (BRI): What Will it Look Like in the Future?," Technological Forecasting and Social Change, Elsevier, vol. 175(C).
    10. Hui Wang & Xin Zhong, 2023. "An Empirical Study on the Impact of Chinese OFDI on the Global Value Chain Positions of Countries Along the Belt and Road and Threshold Effects," SAGE Open, , vol. 13(1), pages 21582440231, February.
    11. Bahoo, Salman & Alon, Ilan & Paltrinieri, Andrea, 2020. "Corruption in international business: A review and research agenda," International Business Review, Elsevier, vol. 29(4).

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