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Journal ArticleDOI

China's Outward Direct Investment: Expanding Worldwide

01 Sep 2003-China: An International Journal (NUS Press Pte Ltd)-Vol. 1, Iss: 2, pp 273-301
TL;DR: The free trade agreement signed between ASEAN and China will no doubt intensify Chinese outward investment to the region as discussed by the authors, and Chinese enterprises are now globally diversified and involved in a wide variety of sectors, including banking, manufacturing and natural resource exploitation.
Abstract: China has become a capital-surplus economy and its overseas investment has grown apace. Although its outward investment is still small in absolute terms, especially compared to the huge inward flow, China's overseas enterprises have been quietly gaining importance as new sources of international capital. They are now globally diversified and involved in a wide variety of sectors, including banking, manufacturing and natural resource exploitation. In the coming years, Chinese outward investment is expected to accelerate. The free trade agreement signed between ASEAN and China will no doubt intensify Chinese outward investment to the region.
Citations
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Journal ArticleDOI
TL;DR: This paper investigated the determinants of Chinese outward direct investment and the extent to which three special explanations (capital market imperfections, special ownership advantages and institutional factors) need to be nested within the general theory of the multinational firm.
Abstract: This study investigates the determinants of Chinese outward direct investment (ODI) and the extent to which three special explanations (capital market imperfections, special ownership advantages and institutional factors) need to be nested within the general theory of the multinational firm. We test our hypotheses using official Chinese ODI data collected between 1984 and 2001. We find Chinese ODI to be associated with high levels of political risk in, and cultural proximity to, host countries throughout, and with host market size and geographic proximity (1984 to 1991) and host natural resources endowments (1992 to 2001). We find strong support for the argument that aspects of the special theory help to explain the behaviour of Chinese MNEs.

2,238 citations


Cites background from "China's Outward Direct Investment: ..."

  • ...Although it is important for completeness that any formal model of Chinese ODI incorporates a policy dimension, lack of transparency in the application of regulations and incentive policies experienced by investors (Wong and Chan, 2003) makes this a difficult aspect to capture....

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  • ...…government support in the form of export tax rebates, foreign exchange assistance and financial support was introduced in 1999 to foster FDI in trade-related activities and to promote Chinese exports, especially in the textiles, machinery and electrical equipment sectors (Wong and Chan, 2003)....

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  • ...Sixth, we should finally note that the relative inexperience of some Chinese firms concerning the establishment and management of large-scale operations abroad may have led to FDI projects being undertaken with insufficient due diligence and attention to associated risks (Wong and Chan, 2003; Ma and Andrews-Speed, 2006)....

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  • ...Although it is important for completeness that any formal model of Chinese ODI incorporates a policy dimension, lack of transparency in the application of regulations and incentive policies experienced by investors (Wong and Chan, 2003) makes this a difficult aspect to capture....

    [...]

  • ...In response to this, numerous subnationallevel authorities allowed enterprises under their supervision to internationalise, especially towards Hong Kong SAR, in order to engage in real estate and stock market speculation (Wong and Chan, 2003)....

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Journal ArticleDOI
TL;DR: In this article, the authors developed the logic that OFDI promotion policies set by emerging market governments are economically imperative and institutionally complementary to offsetting competitive disadvantages of emerging market enterprises in global competition.

950 citations

Journal ArticleDOI
TL;DR: For instance, this article pointed out that most nations in the region now see China as a good neighbor, a constructive partner, a careful listener, and a nonthreatening regional power.
Abstract: pinnings of international relations in Asia are undergoing profound change, and the rise of China is a principal cause. Other causes include the relative decline of U.S. inouence and authority in Asia, the expanding normative inouence of the Association of Southeast Asian Nations (ASEAN) and the growth of regional multilateral institutions, increased technological and economic interdependence throughout the region, and the amelioration of several formerly antagonistic bilateral relationships. As a result of these processes, the structure of power and the nature of the regional system are being fundamentally altered. China’s growing economic and military power, expanding political inouence, distinctive diplomatic voice, and increasing involvement in regional multilateral institutions are key developments in Asian affairs. China’s new proactive regional posture is reoected in virtually all policy spheres— economic, diplomatic, and military—and this parallels China’s increased activism on the global stage.1 Bilaterally and multilaterally, Beijing’s diplomacy has been remarkably adept and nuanced, earning praise around the region. As a result, most nations in the region now see China as a good neighbor, a constructive partner, a careful listener, and a nonthreatening regional power. This regional perspective is striking, given that just a few years ago, many of China’s neighbors voiced growing concerns about the possibility of China becoming a domineering regional hegemon and powerful military threat. Today these views are muted. China’s new conadence is also reoected in how it perceives itself, as it gradually sheds its dual identity of historical victim and object of great power manipulation. These phenomena have begun to attract

449 citations

Journal ArticleDOI
TL;DR: In this article, the empirical determinants of China's outward direct investment (ODI) are investigated and it is found that China's investments in developed and developing countries are driven by different sets of factors.
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.

382 citations


Cites background from "China's Outward Direct Investment: ..."

  • ...See, for example, Wong and Chan (2003). These problems also affect the Chinese official data on FDI from the OECD (OECD, 2003)....

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  • ...Some recent studies include UNCTAD (2003), Wong and Chan (2003) and Wu and Chen (2001)....

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  • ...See, for example, Wong and Chan (2003)....

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Journal ArticleDOI
TL;DR: A substantial body of literature has grown on the prominence of China as a recipient of foreign direct investment (FDI) and its consequences for national economic development and management practice as discussed by the authors.
Abstract: A substantial body of literature has grown on the prominence of China as a recipient of foreign direct investment (FDI) and its consequences for national economic development and management practice (Branstetter and Lardy, 2006). By contrast, much less attention has been paid to China’s position as an FDI source. Given that China attracted an annual average FDI inflow of around US$29bn (or more than 7% of the world’s total) in the 1990s, but contributed less than US$2.5bn (around 0.6%) to global outflows, this is perhaps not surprising (UNCTAD, 2006). However, the sharp growth in Chinese outward direct investment (ODI) evident since 2002 (illustrated in Figure 7.1) combined with a number of recent high profile attempts by Chinese enterprises to acquire North American and European firms have brought into relief China’s rising status and potential as an investor nation. This potential is recognised in a recent UNCTAD survey of investment promotion agencies which predicts that China will become a ‘top three’source country for FDI before the end of 2008 (UNCTAD, 2005). It is also highlighted by the Director-General of UNIDO, Kandeh Yumkella, who suggests that annual flows of Chinese outbound investment are likely to reach US$60bn by 2010 (MOFCOM, 2006). If growth rates in Chinese ODI continue and these predictions are realised, China’s contribution to global FDI flows is likely to approximate current outflows of the leading industrialised countries.

320 citations

References
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Journal ArticleDOI
TL;DR: Wang et al. as mentioned in this paper explored the development of Chinese outward FDI, its characteristics and motives, the external FDI regime, the government's policies and existing problems, and the prospects for the future trend of Chinese inward FDI.
Abstract: It is now receiving wide attention that since the adoption of the open-door policy at the end of the 1970s China has been extremely successful in attracting foreign direct investment (FDI). Particularly, according to UNCTAD's World Investment Report 1997: Transnational Corporations, Market Structure and Competition Policy, China has become the second largest recipient of FDI in the world since 1993, after the United States. On the other hand, however, it seems less noticed that China has also become a growingly important FDI exporting country. According to UNCTAD's same report, China now ranks as one of the largest outward investors among developing economies in the 1990s. By the end of 1996, the cumulative stock of Chinese outward FDI had reached over 27 billion). Consequently, China increased its share in world-wide FDI outflows from less than 0.5 per cent until 1991 to an average of 1.3 percent in 1991–95. As China is rapidly rising as a new economic power, its deepening participation in the regional and global economy, through both inward and outward FDI as well as trade, will inevitably bring about significant implications in the international political economy. This article attempts to explore the development of Chinese outward FDI, its characteristics and motives, the outward FDI regime, the government's policies and existing problems, and the prospects for the future trend of Chinese outward FDI.

234 citations

MonographDOI
30 Sep 1997
TL;DR: In this article, the authors argue that China has the capacity to meet these challenges and sustain rapid growth because it has relative stability, a remarkably high savings rate, a strong track record of pragmatic reforms, a supportive Chinese diaspora, and a growing administrative capacity.
Abstract: For China, swift growth and structural change, while resolving many problems, have created new challenges: employment insecurity, growing inequality, stubborn poverty, mounting environmental pressures, and periods of macroeconomic instability stemming from incomplete reforms. This report argues that China has the capacity to meet these challenges and sustain rapid growth because it has relative stability, a remarkably high savings rate, a strong track record of pragmatic reforms, a supportive Chinese diaspora, and a growing administrative capacity. These strengths can provide a platform for additional reforms needed in three major areas: First, market forces must be encouraged, especially through the reform of state enterprises, the financial system, grain and labor markets, and natural resources pricing. Second, the government must begin serving markets by building the legal, social, physical, and institutional infrastructure needed for rapid growth. Finally, integration with the world economy must be deepened by lowering import barriers, increasing the transparency and predictability of the trade regime, and gradually integrating with international financial markets. Chapter 2 enunciates the report's twin concerns -the pace and sustainability of China's growth- and examines China's growth potential over the long term using a simple model of growth and structural change. Chapter 3 argues that further separating the roles of government and markets and clarifying rights and responsibilities will help lay the foundations for sustained rapid growth and improve the quality of people's lives. Chapter 4 examines the five areas where government action is needed to manage the risks to the population that accompany societal change, including raising living standards for the absolute poor; providing financial security for the elderly; providing access to affordable health care; removing bias against women; and reducing high and prolonged unemployment. Chapter 5 compares the two routes China could take in giving agriculture high priority: obtaining grain self-sufficiency or using trade in agricultural products as a disciplinary device to encourage efficient domestic production. Chapters 6, 7, and 8 focus respectively on protecting the environment, integrating with the world economy, and ultimately fashioning the appropriate political vision to chart China's course into the year 2020.

190 citations

01 Jan 2002
TL;DR: For instance, this article showed that high levels of inward FDI have over-shadowed increasing levels of outward investment in China, which is the subject of this paper, since the late 1980s, the Chinese government has not simply put its effort into exporting "made-in-China" products to earn foreign currency or into encouraging foreign inward capital.
Abstract: Over twenty years' openness has made mainland China (PRC) (hereafter called China) one of the world's major destinations for foreign investment!. Indeed, by the mid-1990s, China became the world's second largest host nation to foreign direct investment (FDI).2 Foreign-funded enterprises have played a catalytic role in the process of a market-based economy, contributing about half of China's foreign trade since the mid-1990s.3 By 1999, China held over US$15 billion in foreign exchange reserves, which was the second largest in the world. These statistics, however, showjust one side of China's "open door" policy. High levels of inward FDI have over-shadowed increasing levels of outward investment, which is the subject of this paper.4 Since the late 1980s, the Chinese government has not simply put its effort into exporting "made-in-China" products to earn foreign currency or into encouraging foreign inward capital. In fact, it has actively encouraged its manufacturers to invest overseas, and has deliberately and strategically organized Chinese transnational activities.5 Throughout the last

112 citations

Book Chapter
23 Jan 2000
TL;DR: In this paper, the authors decouple the Sun-Earth-Moon-======Spacecraft 4-body problem into two 3-body problems using the invariant manifold theory of the Lagrange points.
Abstract: In 1991, the Japanese Hiten mission used a low energy transfer with a ballistic capture at the Moon which required less ΔV than a standard Hohmann transfer to the Moon In this paper, we apply the same dynamical systems techniques used to produce the “Petit Grand Tour” of Jovian moons to reproduce a Hiten-like mission We decouple the Sun-Earth-Moon- Spacecraft 4-body problem into two 3-body problems Using the invariant manifold theory of the Lagrange points of the 3-body systems, we are able to construct low energy transfer trajectories from the Earth and ballistic capture trajectories at the Moon The techniques used in the design and construction of this trajectory may be applied in many situations

79 citations

Journal ArticleDOI
TL;DR: For instance, this paper showed that high levels of inward FDI have over-shadowed increasing levels of outward investment in China, which is the subject of this paper, since the late 1980s, the Chinese government has not simply put its effort into exporting "made-in-China" products to earn foreign currency or into encouraging foreign inward capital.
Abstract: Over twenty years' openness has made mainland China (PRC) (hereafter called China) one of the world's major destinations for foreign investment!. Indeed, by the mid-1990s, China became the world's second largest host nation to foreign direct investment (FDI).2 Foreign-funded enterprises have played a catalytic role in the process of a market-based economy, contributing about half of China's foreign trade since the mid-1990s.3 By 1999, China held over US$15 billion in foreign exchange reserves, which was the second largest in the world. These statistics, however, showjust one side of China's "open door" policy. High levels of inward FDI have over-shadowed increasing levels of outward investment, which is the subject of this paper.4 Since the late 1980s, the Chinese government has not simply put its effort into exporting "made-in-China" products to earn foreign currency or into encouraging foreign inward capital. In fact, it has actively encouraged its manufacturers to invest overseas, and has deliberately and strategically organized Chinese transnational activities.5 Throughout the last

75 citations