Chinese OFDI in Europe under the Guidance of BRI — A Focus on China–CEE Economic Relations

Abstract

China has been actively integrating itself in the global economy through Foreign Direct Investment (FDI) and increasing trade flows. In order to further expand its foreign market ambition and reinforce itself as a leader in the world economic system, China unleashed the Belt and Road Initiative (BRI). One of the main economic incentives behind this initiative is to strengthen China’s integration with Central and Eastern European (CEE) markets. In recent years, an emerging trend for Chinese investors to invest in CEE countries such as Poland can be observed. The aim of this research is to analyze the changing patterns and motives of Chinese Outbound FDI (OFDI) to Europe during the period of 2009–2017 under the guidance of BRI. To explore the heterogeneity of Chinese investments behavior within Europe, this paper summarizes the apparent characteristics of Chinese investment patterns in Western Europe and the CEE region. We show that BRI has — against all expectations — no impact on Chinese investment in the CEE region but — in line with expectations — Chinese investors have changed their motives to invest in CEE countries with a shift towards the service sector. To investigate the impact of BRI on Chinese investors, the period of study is divided into two phases: (1) 2009–2013: period before the proposal of BRI and (2) 2014–2017: period after the initiation of BRI. Then the rationale behind the observed differences is examined in detail.