Errata — Emerging Chinese Foreign Direct Investment in Brunei: Issues and Prospects

This paper examined the relationship between Chinese outward foreign direct investment (FDI) and the industrial sector’s performance represented by the industrial sector’s contribution to the gross domestic product for a sample of 49 African countries between 2003 and 2019. The study also examined the moderating effects of Chinese FDI on Africa’s industrial performance. We employed panel fixed-effects and panel-corrected standard errors models to control for country heterogeneities and serial correlation in the disturbance terms, usually present in panel data and may bias the estimates. The results showed that Chinese FDI has moderating effects on industrial performance through industrial employment and natural resources. We also found a significant positive relationship between contemporaneous Chinese FDI and industrial performance, suggesting that Chinese FDI of a given year positively affects the same year’s industrial performance. The study further revealed lingering effects of Chinese FDI on industrial performance, implying the favorable impact of Chinese FDI on industrial performance in a given year may not be immediate. Policymakers are advised to improve the absorptive capacities of industrial workers and direct Chinese FDI towards transforming natural resources into industrial goods.

We use disaggregated data by country and industry to empirically analyze the host country determinants of Chinese outward foreign direct investment (FDI) for the years 2003 to 2011. Our results suggest that the host-country determinants of Chinese FDI differ between high- and low-income countries. While all Chinese FDI is invariably market seeking, other motivations stand out for differing sectors in specific country groups. The resource seeking motivation is relevant for manufacturing FDI to high-income countries with relatively high fuel abundance, and to low-income countries with primary resource abundance (other than fuels). Differently, the strategic-asset seeking motivation, measured by the level of R&D spending on GDP, only positively and significantly affects Chinese manufacturing and service FDI to OECD countries, while higher education levels are an attraction factor for all investing firms. Natural resource is an important attraction factor for Chinese FDI, not only in resource-related sectors, but also in manufacturing and service sectors. Finally, Chinese FDI tends to follow exports (rather than foster them), especially in service sectors.

Recent studies have hypothesized that the Chinese state has sought to use outward flows of foreign direct investment (FDI) to Latin America and Africa in order to promote broad national interests, including securing China's access to oil and other natural resources, and pressuring states to abandon diplomatic ties with Taiwan. To date, however, there has been little systematic empirical study of the influence of these factors on Chinese FDI. In this study, we attempt to fill this gap in the literature. Utilizing a cross-sectional time-series data set for 66 countries for the period of 2003–2010, we investigate the effects of various economic and political variables on Chinese FDI in Latin America and Africa. We find that Chinese FDI is influenced by trade flows and natural resources in host economies, including oil resources and ores and metals, while also being directed to markets with lower per capita income. In addition, the study adds to the prior literature by demonstrating empirically that Chinese FDI flows are negatively associated with recipients who maintain diplomatic recognition of Taiwan. The analysis also suggests that, with the exception of natural resources (oil), there is little overlap in the determinants of Chinese and US FDI.

Inward Foreign Direct Investment (FDI) in China has received a significant amount of research attention (Graham and Wada, 2001). In stark contrast, Chinese outward FDI has, to date, not received attention on the same scale (Goldstein et al., 2006: 12; Hong and Sun, 2004: 4). There are a small number of studies on countries in Southeast Asia (e.g., Wu and Sia, 2002) and Russia (e.g., Wu and Chen, 2001). However, there is little research available on Chinese investment in Africa. Indeed, even the level of outward Chinese FDI is unclear and this is particularly so in Africa. This is not only because of data weaknesses but the very nature of Chinese FDI and its blurred boundaries with Chinese aid and non-equity investments. Kaplinky et al. (2007: 26) put it thus, ‘It is not clear how much of Chinese economic activity in Sub-Saharan Africa comprises FDI, how much is a result of winning commercial tenders, how much is linked to Chinese aid and how much is part of integrated production networks’.

This paper discusses Chinese Foreign Direct Investment (FDI) in Africa’s natural resources and its impacts on local communities. It opens the discussion by highlighting in the preamble how and why Chinese FDI has been skyrocketing especially beginning around the early 2000s with the introduction of the going global policy. The paper then zooms further to give a more nuanced understanding of the nature of Chinese FDI and the main areas of investment in Africa. Information for this write up was collected from secondary sources including published books, articles and seminar papers among others. The paper shows that Chinese FDI has impacted both positively and negatively on local communities in Africa. On the positive front, Chinese FDI has been instrumental in employment creation and infrastructure development. Notwithstanding this, Chinese FDI has been accused of engaging in socially irresponsible investments taunted with abusive employment conditions, environmental pollution etc. The paper remains skeptical on concluding whether Chinese FDI has been harmful or beneficial to the local or host communities because of the limited evidence provided in the paper. Hence, it ends by recommending possible areas for further research on the topic.

This paper compares the patterns of the US and Chinese outward foreign direct investment (FDI) in Africa. The main objective of the paper is to examine if the motives for FDI for these two countries differ. This is done first with a descriptive analysis and then with empirical research. It reveals that Africa attracts only a small fraction of FDI from both the US and China. However, compared to the US, China’s FDI outflow to Africa is rising rapidly. It was only 8% of the US outward FDI in 2006, but is about 20% in 2010. Based on the standard FDI literature, the paper then investigates the determinants of FDI for both the US and China empirically. Hypotheses are developed and tested using ordinary least squares regression methods. Data are annual averages for the period 2003-2010. They are gathered from various standard sources such as the World Bank, The United Nations Conference on Trade and Development (UNCTAD), and the Chinese government. The paper finds expected result for market size, resource endowment, corruption, and openness. Chinese investment in Africa is often viewed as their desire to control natural resources, but the paper finds that the US investment is no different in this regard. The paper’s finding contradicts with the popular perception that Chinese outward FDI ignores corruption or attracted to countries with higher level of corruption. With respect to political risk, the paper finds that Chinese FDI flow is not significantly different from the US FDI flow.

This paper focuses on China's outward foreign direct investment (FDI), arguably one of the most prominent forms of 'new' capital entering the Association of South East Asian Nations (ASEAN) in recent times, not least since the Belt and Road Initiative (BRI) was announced by Chinese President Xi Jinping in 2013. Despite initial warmth and hopes for Chinese capital to uplift the economies of the region, recent years have witnessed some high profile pushback against China by some ASEAN members. Key concerns include but are not limited to new, often project-related concerns as well as old, if unspoken, fears that 'China is buying the world' through a spate of 'debt trap diplomacy'. This paper aims to shed light on this issue, focusing on China's outward FDI into ASEAN. Through an analysis of statistical information, it shows that Chinese FDI in ASEAN economies is considerably 'smaller' than what popular rhetoric suggests. Firstly, Chinese outward FDI, while increasing in value, is not more significant than the region's traditional investors, mainly Japan and ASEAN itself. Secondly, the quality of Chinese outward FDI is considerably less sophisticated and sustainable than what is commonly expected. Much of it is directed towards tertiary industries such as real estate activities, which contain a rather speculative element.

This paper investigates the effect of Chinese outward foreign direct investment (FDI) on youth unemployment in sub-Saharan Africa (SSA) by using a modified labour demand model to identify the investment sources that are helpful for reducing youth unemployment in the region. The model is applied to a panel of 42 countries for the period 2003–2021 using random-effect, and generalized method of moment (GMM) estimators for robustness check. Our results suggest that Chinese FDI has direct short-term reducing effect on youth unemployment in SSA. The direction of China’s capital investment to infrastructure development and other labour-intensive activities leads to immediate reduction in youth unemployment. However, overtime, due to absence of linkages with domestic firms, and thus lack of demand effects, Chinese FDI becomes insignificant for employment creation. Our results also indicate that Other FDI does not lead to significant reduction in youth unemployment both currently and overtime. Our analysis gives partial support to the argument that the impact of Chinese FDI may differ from those of developed countries. Finally, we could not find evidence that the effect of FDI on employment depends on host country human capital and institutional quality. Several specifications of the empirical model are tested, and explanations are provided for the results. Policy implications are highlighted, especially the need to attract more job absorbing FDI and improve domestic absorptive capacity.

The upsurge of Chinese and Indian outward foreign direct investment (FDI) raises an unanswered question about locational determinants of direct investment from the two countries. Using an unbalanced bilateral FDI database, we find that Chinese and Indian FDI are attracted to countries with large market size, low GDP growth, high volumes of imports from China or India, and low corporate tax rates. We also find important differences between China and India. While Chinese FDI is drawn to countries with open economic regimes, depreciated host currencies, better institutional environments, and English speaking status, none of these factors are important for Indian FDI. Chinese FDI is also deterred by geographic distance and OCED membership. However, neither of these has any impact on Indian FDI.

PurposeThe aim of this study is to shed light on the relative importance of Chinese (Mainland China and Hong Kong: CH-HK) foreign direct investments (FDIs) in real estate (FDIRE) on the dynamics of Asia-Pacific (APAC) public real estate markets after the Global Financial Crisis.Design/methodology/approachUsing a parsimonious real estate asset-pricing model including macroeconomic risk factors, the authors develop a metric to measure FDIs in the real estate sector. The authors use a panel VAR approach based on robust econometric methodology (generalized method of moments) and deal with potential endogeneity and an eventual causality problem. The authors also compute multiple metrics to measure the Chinese, US and Japanese FDIs in the real estate sector.FindingsThe study results report a positive significant impact of CH-HK FDIRE on APAC public real estate returns, while FDIRE originating from outside China are not significant. The authors also show that Chinese investors use the channel of FDIs in Diversified Listed Property Companies (LPCs) and Hotel and Family LPCs to gain exposure to the APAC real estate markets. The study results suggest that APAC property markets are mainly impacted and emphasize the importance of an intercontinental diversification strategy for investors in LPCs in the APAC region.Practical implicationsContrary to Bond et al. (2003) who identified that APAC public real estate markets were overwhelmingly idiosyncratic in the decade preceding China's WTO membership (1990–2001), the study findings underline that Chinese FDIRE became a common factor affecting all eight markets in this study in the decade following the global financial crisis (2007–2017). The results emphasize the importance of an intercontinental diversification strategy for investors in LPCs in the APAC region.Originality/valueThe authors use a parsimonious model, introduce metrics to measure FDIRE and apply a panel VAR approach based on a robust econometric methodology to shed light on China's economic globalization strategy on Asia-Pacific public real estate markets after the GFC. The study results highlighting the major impact of CH-HK FDIRE on securitized real estate market returns dynamics, identify the existence of an Asian common factor driven by Chinese FDI inflows into neighbouring countries.

What is the relationship between Chinese foreign direct investment (FDI) and human rights in host countries? As China has emerged as one of the world’s leading international investors, examining the determinants of FDI inflows from a non-democratic and non-Western power offers valuable insights into a central theoretical puzzle: Does repression attract FDI? This paper engages with theories on FDI and human rights, focusing on the interplay between repression, political stability, and natural resource rents and how these factors shape the investment preferences of foreign actors. The central hypotheses—stability maintenance and extractive repression—propose that countries exhibiting higher political stability and greater reliance on natural resource rents are more likely to attract Chinese outward FDI. Recipient governments may be incentivized to employ coercive measures to foster a stable investment climate. Using regression analysis covering the period from 2003 to 2023, alongside two country case studies—Cambodia and Indonesia—this study investigates the conditions under which human rights conditions in host countries are associated with Chinese FDI inflows. Most importantly, the findings reveal two distinct dimensions of Chinese FDI, illustrating how it can be drawn to repressive recipient countries in rentier and non-rentier state contexts. By shedding light on the dynamics of Chinese investment in Southeast Asia, this paper contributes to the broader literature on China’s global engagement and FDI.

This article explores the political economy of Chinese outward foreign direct investment (FDI) in Argentina during the reign of Nestor Kirchner and Cristina Fernandez. Among other things, it contemplates possible links between Chinese outward FDI (OFDI) volumes and Argentina’s domestic and foreign policies. It also analyses a mixture of successful and unsuccessful Chinese investment cases in the agricultural, chemical, and banking sectors in order to engage the debate about the drivers of Chinese OFDI (COFDI), with some stressing business and economic factors and others emphasizing the primacy of political factors. In regards to the former, my study shows that Argentine policymakers did not offer special accommodations to Chinese investors despite the pro-China proclivities of Argentine leaders and their country’s economic and political need for China. Moreover, at the local level, Argentine politics actually proved to be an obstacle to successful Chinese deals. As for the latter issue, Chinese companies were not inclined to invest in Argentina because of the China stance of the Argentine government, but rather because they saw opportunities to exploit fertile agricultural soil, special tax regimes for investors, and opportunities to integrate into global value chain. My findings have a number of important theoretical and policy implications.

Much scholarship finds a negative but inconsistent statistical relationship between host‐state terrorism and overseas foreign direct investment (FDI). However, empirical studies generally have not investigated terrorism in the context of Chinese overseas FDI. Comparing United States and Chinese overseas FDI for up to 107 developing countries from 2004–2018, and using a Two‐Stage‐Difference‐in‐Difference approach as well as a dynamic panel data analysis approach (i.e., the System General Method of Moments), we find a negative and at times statistically significant association between terrorism and U.S. FDI and a positive and frequently statistically significant relationship between terrorism and Chinese FDI, and this is true for both Chinese public and private investors. We argue that the U.S. and Chinese governments have different effects on overseas FDI, where the U.S. has a limited impact while China often encourages its firms to tolerate risk. Our research suggests that the nature of home governments affects the risk perception of their overseas investors.

Background: Macro-locational determinants of foreign direct investment (FDI) constitute a country’s comparative advantage in attracting FDI. Although literature identifies potential determinants of Chinese FDI, empirical studies reveal significant variation across countries, necessitating investigation of specific macro-locational factors in each context.Aim: Despite its abundant resources and reliance on FDI for development, Cameroon has experienced slow FDI growth. Efforts to enhance trade and investment relations between Cameroon and China make an understanding of Chinese FDI drivers crucial for policymakers. This study aims to ascertain the significance of macro-locational determinants in attracting Chinese FDI to Cameroon.Setting: The study uses quarterly data on proposed macro-locational determinants of FDI from 2003 to 2017.Method: Data were obtained from credible databases and reports. The study employs time series data and uses the Johansen approach and vector error correction modelling for analysis.Results: Findings indicate a statistically significant positive relationship between Chinese FDI and Cameroon’s market size and competitiveness. A significant inverse relationship was found between exchange and interest rates and Chinese FDI. Trade openness had a small but ambiguous effect on Chinese FDI.Conclusion: The results align with FDI theories though not all proposed determinants were significant for Chinese FDI in Cameroon. To attract FDI, Cameroon must expand its market, stabilise exchange rates and maintain competitiveness, especially through skills development. Financial institutions should provide competitive interest rates to promote private-sector borrowing.Contribution: This study enhances the understanding of the key factors influencing Chinese FDI in Cameroon and contributes to the limited research on macro-locational determinants of FDI in Africa.

This research investigates the main motivations driving China’s foreign direct investment (FDI) in France and the management style that Chinese companies adopt toward their French subsidiaries. On the basis of interviews with managers of 17 Chinese subsidiaries in France, the authors identify sales in French and European markets as the main driver of Chinese FDI in France. Chinese FDI in France also aims at building bridges to African markets. The second FDI motive is asset seeking. For managing their subsidiaries in France, the Chinese companies adopt a polycentric management style. The Chinese parent companies rely on French managers, while Chinese expatriates adopt observational attitudes. This research confirms that the Chinese government is closely involved in Chinese outward FDI and supports both the “linkage, leverage, and learning” perspective and springboard theory.