Abstract
China’s direct investment overseas reaches US$170.11 billion and is US$44 billion more than the actual use of foreign investment, which makes China a net capital exporter. Large scale of Outward Foreign Direct Investment also has a great influence on the export. This article made an estimation on the export effect of Outward Foreign Direct Investment through fixed effect model and Generalized Method of Moment based on the provincial panel data from 2004 to 2014. The result shows Outward Foreign Direct Investment has a positive effect on export whether in the whole country or in different districts, every 1% increase of Outward Foreign Direct Investment will lead to about 0.1% rising in export, and moreover positive effect of Outward Foreign Direct Investment in the middle and western districts is stronger than that in the eastern district.
Highlights
According to the statistics from China’s ministry of commerce and state administration of foreign exchange, in 2016, the Chinese investors made direct investment overseas in 7,961 enterprises of 164 countries and regions
The direct investment overseas is US$44 billion more than the actual use of foreign investment which reached US$126 billion in 2016, which means that China has become a net capital exporter
Why does China need large scale of outer foreign direct investment, and what influence will be brought by the large scale of outer foreign direct investment on export which is a major driver of Chinese economic growth? Will it promote export or replace export? Study on this problem contributes to the economy theory, and to the practice
Summary
According to the statistics from China’s ministry of commerce and state administration of foreign exchange, in 2016, the Chinese investors made direct investment overseas in 7,961 enterprises of 164 countries and regions. Internationalization of production and block factorization of value chain merge with the elimination of tariff wall and decrease of transportation and communication cost, and industry becomes multinationalization and its value chains are subdivided into many countries. In this way, Company can complete all production procedure in the district with highest efficiency and lowest cost, and wins the competitive advantages. OFDI can replace as well as complement the export of motherland in theoretical study, while it is complementary to the export in the practical study. The article tries to analyze the influence of OFDI to export in China based on the provincial panel data of 2004 to 2014 through the ways of fixed effects and GMM estimation, and further propose suggestion for the development of OFDI in China
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