What drives China's outward direct investment?

Chih Hai Yang, Mei Chun Cheng, Chun Hung Lin

Research output: Contribution to journalArticlepeer-review

2 Scopus citations

Abstract

This study examines the determinants of China's outward direct investment (ODI) between 2003 and 2009. We first analyse the structure and dynamics of ODI. We propose three testable hypotheses including technology sourcing, resource seeking, and political linkage. Various estimates show that technology sourcing is supported moderately, whereas resource seeking serves one of primary driving forces. Crucially, the motive of political linkage is significantly related to ODI and it is particularly relevant to developing destinations. This finding indicates that China tends to invest in developing countries with high political risk, which is in contrast with the prediction of the FDI theory. Furthermore, a developing country with high political risk seems to be the favoured destination for China's ODI to acquire technologies and resources.

Original languageEnglish
Pages (from-to)431-453
Number of pages23
JournalActa Oeconomica
Volume65
Issue number3
DOIs
StatePublished - Sep 2015

Keywords

  • China
  • Energy
  • FDI
  • Political risk

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