Outward Foreign Direct Investment In China Research Articles

The Impact of Bilateral Currency Swaps on Outward Foreign Direct Investment

The outbreak of the 2008 international financial crisis caused many countries around the world to face exchange rate fluctuations and currency crises. At the same time, China's central bank creatively began to sign central bank currency swap agreements with other countries to stabilize exchange rates and avoid the risk of fluctuations in the US dollar. This article is based on panel data from 90 countries from 2000 to 2021, and uses empirical analysis methods to explore the impact of currency swap agreements on China's outward foreign direct investment. On this basis, the intermediary effect is applied to analyze the financial market mechanism of currency swap policy. Research has found that currency swap agreements have a significant positive impact on the scale of China's outward foreign direct investment (OFDI). Financing constraints are an important influencing mechanism for currency swap agreements to promote China's OFDI. In the context of economic globalization and complex international situations, this study has important reference value for China to further promote deepening cooperation in the financial field between countries and promote the internationalization of the renminbi to facilitate the domestic and international dual circulation.

Influence of financial inclusion and industrial robots on the efficiency of China's OFDI: A heterogeneous spatial stochastic frontier analysis

Enhancing the efficacy of China's outward foreign direct investment (COFDI) constitutes a significant avenue for realizing the sustainable development of China's economy. This study analyzes panel data from 63 countries from 2010 to 2021 to create a heterogeneous spatial stochastic frontier model to examine how financial inclusion and industrial robotics in host nations affect COFDI efficiency. The findings are as follows. To begin with, COFDI manifests positive spatial spillover effects across countries. Moreover, from a spatial perspective, financial inclusion diminishes COFDI efficiency, whereas the interaction between financial inclusion and industrial robots increases its efficiency. Industrial robots, thus, counteract the diminishing impact of financial inclusion on COFDI efficiency. Additionally, concerning the heterogeneity of location choice and investment motivation in COFDI, the interaction between financial inclusion and industrial robots in developed economies augments COFDI efficiency as opposed to emerging market economies. Conversely, technology-seeking investment mitigates the adverse effects of financial inclusion on the efficacy of COFDI when juxtaposed with resource-seeking investment. This study provides theoretical insights and practical recommendations for improving the efficiency and guiding the destination selection of COFDI.

Evaluating the impact and heterogeneity of China's OFDI on total-factor carbon emission performance in Belt and Road Initiative countries

Studying how China's outward foreign direct investment (OFDI) affect total-factor carbon emission performance (TFCEP) of the Belt and Road Initiative (BRI) countries is essential. It helps evaluate the effectiveness of China's BRI and improves China's future investment decisions. This study evaluates the TFCEP of 65 BRI countries between 2005 and 2020, and explores how China's OFDI influences TFCEP in BRI countries by a spatial difference-in-differences model. The results reveal a notable improvement in TFCEP among BRI countries following BRI implementation, with technological advancement having a crucial influence on this enhancement. China's OFDI are shown to have raised income levels and optimised industrial structures in BRI countries but have not substantially increased renewable energy generation. The primary contributions of China's OFDI to TFCEP improvements in BRI countries are through industrial structure optimization and technology advancement effects. The impact of China's OFDI on TFCEP varies geographically, being most significant in Southeast Asian countries, followed by Central Asia, Western Asia, Europe, and Africa. However, its effect is minimal in countries like Syria, Tunisia, and Algeria. The study suggests that the Chinese government should devise investment strategies tailored to the unique needs of BRI countries, emphasizing green development.

Study on the Impact and Mechanism of the Quality of Host Country Institutions on China's OFDI

In recent years, the scale of China's Outward foreign direct investment (OFDI) has grown rapidly, but with the increasingly complex and changeable international environment, China's OFDI is facing great pressure. Taking 159 countries as samples, this paper selects 10 secondary indicators from the three dimensions of politics, economy, and law to construct the evaluation system of host country institutional quality, and measures the host country institutional quality from 2011 to 2021, studies the influence of host country institutional quality on China's OFDI and the intermediary mechanism, and conducts heterogeneity test. The conclusion shows that the improvement of host country's institutional quality significantly promotes the inflow of China's OFDI, and at the same time, the improvement of host country's institutional quality can improve the country's scientific and technological innovation ability and infrastructure construction level, and ultimately promote the increase of China's OFDI. This promoting effect is more obvious in low-middle-income countries and countries that have signed the Belt and Road agreements. Finally, suggestions are put forward based on the conclusions.

Impact of corruption control, free information flow, and ICT infrastructure on China's outward foreign direct investment

ABSTRACT This study examines the interplay between corruption control, Information and Communication Technology (ICT) infrastructure, and free information flow, assessing their collective influence on China's Outward Foreign Direct Investment (OFDI). Based on unbalanced panel data on China's OFDI flows to 182 countries from 2005 to 2020, we find that improved corruption control measures and advanced ICT infrastructure in host countries significantly increase China's OFDI. Furthermore, a more robust information flow, facilitated by e-participation and a free press in the host country, enhances the positive influence of corruption control measures on attracting China's OFDI. Importantly, the beneficial effect of corruption control on China's OFDI is amplified when the host country has well-developed ICT infrastructure that supports e-participation. By elucidating the complex interplay between institutions, ICT, and international business activities, this study contributes novel insights into the understanding of ICT's role in socioeconomic development, particularly in the context of foreign investment.

The impact factors of China’s outward foreign direct investment in Singapore

The sudden outbreak of COVID-19 pandemic led to a global recession, but China's OFDI remained on a steady rise, attracting global attention. By the end of 2020, Singapore was the second most developed country after the US in terms of receiving outward foreign direct investment (OFDI) flows from China. The investment cooperation between China and Singapore played an important role in promoting the high-quality development of the Belt and Road Initiative and enhancing the economic cooperation between China and ASEAN after the COVID-19 pandemic. This study delves into the influencing factors of Chinese OFDI to Singapore: home country institutions, host country institutions, and investment motives. This study takes Singapore as the research object and uses the data of China’s OFDI to Singapore from 2001 to 2020 to conduct an empirical analysis through a modified regression model to analyze the development of China’s OFDI to Singapore, so as to make contributions to: (1) providing empirical evidence for studying OFDI from developing to developed countries; (2) providing reference for investment cooperation in the post COVID period between China and Singapore.

Does geopolitical risk affect exports? Evidence from China

Geopolitical conflicts and power games among major nations present substantial challenges to cross-border trade and global economic development; however, the existing literature has given limited attention to the underlying macroimpact mechanisms, especially the pivotal role of outward foreign direct investment (OFDI). This paper utilizes export data spanning 2003–2021 to empirically investigate the influence of geopolitical risk on China's exports and unveil its specific internal mechanisms. The findings reveal that China's exports are negatively affected when its trading partners are exposed to geopolitical risk. Notably, China's OFDI is instrumental in mitigating the adverse effects of geopolitical risk on exports. Moreover, the heterogeneity analysis shows that the impact of geopolitical risk on China's exports is more significant in non-Belt and Road countries than in Belt and Road countries. Furthermore, the impact of geopolitical risk on exports also shows significant differences before and after the 2008 financial crisis.

Analysis of the impact of China's OFDI on China's export trade

This article aims to analyze the impact of China's outward foreign direct investment (OFDI) on China's export trade. In theoretical analysis, the motives behind China's OFDI were explored, including seeking resources, expanding the market, enhancing technology and management capabilities, and promoting enterprise internationalization. In terms of positive impact, the positive impact of OFDI on expanding export markets, enhancing product competitiveness, and optimizing industrial structure was discussed. However, it also pointed out negative impacts such as backflow effects and trade protectionism. By taking Huawei's investment in the African market as a case study, this paper analyzes its impact on expanding export markets, upgrading technology, increasing export added value, and driving the development of related industries. In the analysis of influencing factors, multiple factors such as policies, markets, and industries were mentioned. Finally, policy recommendations for the development of OFDI from the perspectives of government, enterprises, and industry were proposed.

Outward foreign direct investment operation modes and reverse technology spillovers: Implications for the quality of economic growth

This study delves into the nuanced relationship between China's outward foreign direct investment (OFDI) and the enhancement of economic growth quality, with a focus on the reverse technology spillover effect. Our findings reveal that OFDI contributes significantly to the efficiency and sustainability of economic growth. Notably, we observe a time-lag effect in the positive impact on growth quality, indicating a delayed manifestation of reverse technology spillovers. Furthermore, heterogeneity analysis suggests that OFDI in high-economic-level host countries, by firms with fewer branches and those in trade sales, enhances the quality, efficiency, and sustainability of China's economic growth, albeit with limited stability impact. Additionally, we uncover a mediating effect wherein OFDI-induced scale expansion elevates domestic human capital levels and research and development intensity, narrows the technology gap, and substantially increases the quality of China's economic growth. This research not only sheds light on the strategic value of China's OFDI in global economic dynamics, but also offers actionable insights for policymakers and businesses to harness OFDI for sustainable and quality-driven economic advancement.

Green outward foreign direct investment and host country environmental effects: The home country's carbon emission reduction system is crucial

Studies on the environmental impacts of outward foreign direct investment (OFDI) with less attention paid to the relationship between gradually increasing green investment and carbon emissions in the host countries. Based on the background of global carbon emission reduction, this study constructs a STIRPAT and difference-in-differences model to analyze the environmental effects of China's OFDI in ASEAN countries using unique enterprise-level data of China's OFDI from 2005 to 2020. The results show that the impact of Chinese OFDI on carbon emissions in ASEAN countries varies with the investment sector, the home country's enterprise ownership type, and environmental policy. China's green OFDI shows a clear “Pollution Halo” effect regarding investment sectors. However, the “Pollution Halo” effect of green OFDI by Chinese state-owned enterprises (SOEs) is more pronounced when considering the home country's enterprise ownership type. In addition, from the home country's environmental policy perspective, implementing China's domestic low-carbon pilot policy has a “Pollution Haven” effect on host countries. This study provides policy implications to promote the green transformation of Chinese OFDI and carbon emission reduction in ASEAN countries.

Does Institutional Distance Affect Transnational Knowledge Spillovers Between Countries?

This article studies the impacts of the institutional distances between home and host countries on technology spillovers and reverse technology spillovers of multinational investment. Extant research has studied the impacts of the technological spillover effects of foreign direct investment (FDI) and outward FDI (OFDI) on the technology innovation of home and host countries and the impact of the institutional environment on the technological spillovers of transnational investments. However, these studies have failed to distinguish the impacts of institutional profiles and institutional distances on multinational investments. The impacts of institutional profiles and institutional distances on cross-border business activities require additional, diligent theoretical and empirical research. We believe that the technological spillovers of multinational enterprises (MNEs) are affected not only by their institutional environments but also (and perhaps more importantly) by the institutional distances between home and host countries. We used data for Chinese investment in 11 countries over the past 15 years, and the analytical results showed some interesting conclusions. China's OFDI has not produced significant technology spillover effects, so overseas investment by MNEs needs to be more mature and return to rationality. However, FDI has a significant technology spillover effect, and institutional distance has indeed hindered FDI technology spillovers in China.

Can outward FDI promote export diversification for emerging economies? Firm-level evidence from China

Recent studies have highlighted the importance of export diversification in facilitating emerging economies’ structural change and economic development. This study aims at investigating whether outward foreign direct investment (OFDI) can promote export diversification. Using a firm-product-level dataset, this study investigates empirically the impact of China's OFDI conducted by exporting firms on their export diversification both at product-level and destination-level. By employing propensity score matching (PSM) techniques and differences-in-differences (DID) analysis, this study finds that China's OFDI has a positive and statistically significant impact on promoting China's diversification of export basket, and the promotion effects vary upon different motivations of OFDI. A dynamic effect test shows that the promotion effects of OFDI are significant for several consecutive years after outward investment was made. In addition, this study also finds that the promotion effects mainly come from optimised organisational structure and improved business performance of the OFDI firms.

The carbon reduction effect of "Going Global" strategy: an empirical perspective on the carbon emission efficiency of OFDI in China.

Under the constraints of the "dual-carbon" objectives, how China can sustain economic development while concurrently achieving carbon emission reduction has become a pressing issue. With the rapid expansion of China's outward foreign direct investment (OFDI), elucidating its impact on carbon emission efficiency (CEE) assumes pronounced significance. Employing the systematic generalized method of moments (GMM) approach, based on panel data spanning the years 2006 to 2019 for China, this study primarily delves into the influence of OFDI on China's CEE. Furthermore, it probes into the mechanisms and asymmetries underpinning the relationship between OFDI and CEE. The principal findings are as follows: (1) augmentation of OFDI exerts a constructive effect on domestic carbon emission reduction, concomitantly yielding a discernible enhancement in CEE. A 1% increase in the magnitude of OFDI flow gives rise to a 0.009% improvement in CEE. (2) Mechanism verification reveals that heightened levels of OFDI operate through elevating green total factor productivity (GTFP), fostering optimal industrial structural adjustments, and invigorating green technological innovation, thereby elevating the CEE of the home country. (3) Asymmetry characterizes the impact of OFDI on domestic CEE, signifying a significant enhancement in regions with lower CEE while exhibiting less conspicuous effects in areas with higher CEE. This study furnishes policymakers with insights into leveraging OFDI to enhance CEE, thereby facilitating the attainment of the "dual-carbon" objectives.

The Impact of Renminbi Exchange Rate and Exchange Rate Volatility on China's Outward Foreign Direct Investment

China's Outward Foreign Direct Investment (OFDI) has been steadily increasing in recent years, and the Renminbi exchange rate and its volatility have played a crucial role in shaping this trend. This study aims to explore the impact of the Renminbi exchange rate and its fluctuations on China's OFDI. By analyzing OFDI data to 21 countries and regions globally from 2004 to 2019, we conclude that an appreciation of the Renminbi can facilitate China's OFDI, while depreciation may potentially hinder its growth. However, our research also reveals that the impact of Renminbi exchange rate volatility on OFDI is limited. Additionally, factors such as the host country's GDP size and level of openness also influence China's OFDI to a certain extent. Finally, based on our empirical findings, we provide policy recommendations to help China better manage its outward foreign direct investment.

The Impact of RMB Exchange Rate Fluctuations on China's Outward Foreign Direct Investment: An Empirical Analysis

Recently, the RMB exchange rate has experienced significant fluctuations. On May 13th, the spot exchange rate of onshore RMB against the US dollar fell below 6.8, depreciating by over 1000 basis points compared to the opening rate of 6.6985 on May 9th. Against this backdrop, this paper follows the research paradigm of Zhang Weifu (2008) to empirically examine the impact of RMB real exchange rate changes on Chinese enterprises' outward foreign direct investment (OFDI). Drawing on OFDI research frameworks for developed and developing countries, it first reviews theories of internal forces, external forces, and environmental support for China's OFDI, and discusses real exchange rate impacts on OFDI through the environmental support channel. A standardized microeconomic model is developed to show, under certain assumptions, that real exchange rates affect OFDI via export channels. An empirical model then tests these effects. Finally, policy recommendations are provided based on the theoretical and empirical results.

Modelling spatio-temporal patterns of Chinese foreign direct investment under the Belt and Road Initiative

PurposeThis paper aims to explore the spatio-temporal patterns of Chinese foreign direct investment (FDI) since the inception of the Belt and Road Initiative (BRI) in 2013 as an extended version of geographically weighted regression.Design/methodology/approachThe panel data are used to examine spatial and temporal dynamics of the magnitude and the direction of China's outward FDI stock and its flow from 2011 to 2015 at a country level. Using the geographically and temporally weighted regression (GTWR), spatio-temporal distribution of FDI is explained through Logistic Performance Index, the size of gross domestic product (GDP), Shipping Linear Connectivity Index and Container Port Throughput.FindingsA comparative analysis between participating and non-participating countries in the BRI shows that the size of GDP and Container Port Throughput of the participating countries have a positive effect on the increases of China's outward FDI Stock to Asia especially after 2013, while non-participating countries, such as North America, Western Europe and Western Africa, have no significant effect on it before and after the implementation of the BRI.Research limitations/implicationsThe findings, however, will not necessarily provide insight into the needs of China's outward FDI in certain countries to develop their economy. The findings provide the evidence to inform policy making to help identify the winners and losers of the investment, scale and direction of investment and the key drivers that shape the distributive investment patterns globally.Practical implicationsThe study provides the empirical evidence to inform investment policy and strategic realignment by quantifying scale, direction and drivers that shape the spatio-temporal shifts of China's FDI.Social implicationsThe analysis also guides the Chinese government improve bilateral trade, build infrastructure and business partnerships with preferential countries participating in the BRI.Originality/valueThere is an urgent need to adopt a new perspective to unfold the spatial temporal complexity of FDI that incorporates space and time dependencies, and the drivers of the situated context to model their effects on FDI. The model is based on GTWR and an extended geographically weighted regression (GWR) allowing the simultaneous analysis of spatial and temporal decencies of exploratory variables.

China's foreign direct investments: Do they promote domestic green technology?

This study systematically analyses the nonlinear relationship between China's outward foreign direct investment (OFDI) and reverse green technological progress (RGTP) using fixed effects (FE) model based on panel data for 31 Chinese provinces from 2001 to 2020. We find that the link between China's OFDI and RGTP is an inverted U-shaped curve. In addition, environmental regulation and technology gaps all reduce the height of the inverted U-shaped inflection point. Environmental regulation prolongs the "climb" stage while technology gaps compress the "climb" stage of the inverted U-curve relationship significantly. This result is verified in further robustness tests. The four transmission mechanisms of China's OFDI on RGTP play a positive role: these findings may help policymakers to design more flexible and effective OFDI policies.

Impact Factors of China’s Outward Foreign Direct Investment in Singapore

The sudden outbreak of COVID-19 pandemic led to a global recession, but China's OFDI remained on a steady rise, attracting global attention. By the end of 2020, Singapore was the second most developed country after the US in terms of receiving outward foreign direct investment (OFDI) flows from China. The investment cooperation between China and Singapore played an important role in promoting the high-quality development of the Belt and Road Initiative and enhancing the economic cooperation between China and ASEAN after the COVID-19 pandemic. This study delves into the influencing factors of Chinese OFDI to Singapore: home country institutions, host country institutions, and investment motives. This study takes Singapore as the research object and uses the data of China’s OFDI to Singapore from 2001 to 2020 to conduct an empirical analysis through a modified regression model to analyze the development of China’s OFDI to Singapore, so as to make contributions to: (1) providing empirical evidence for studying OFDI from developing to developed countries; (2) providing reference for investment cooperation in the post COVID period between China and Singapore.

Analysis on Location Choice of China's OFDI in RCEP Countries

Based on the panel data of RCEP countries from 2007 to 2021, this article analyzes the location choice of China's outward foreign direct investment (OFDI) in RCEP countries. The results show that China's OFDI to RCEP countries is influenced by many factors. The market size and labor force of the host country significantly promote it, while the host country’s tax burden and natural resource endowment significantly inhibit it. In order to better leverage the advantages of the RCEP, China should take a more active role in implementing the RCEP, improving labor market security system, optimizing its investment in RCEP countries, and actively integrating into the host society.

The green halo effect of China's OFDI: evidence from countries along the Belt and Road.

The growth of China's OFDI (outward foreign direct investment) is a unique feature of the "Belt and Road" project. Does China's OFDI have a green halo effect on countries along the Belt and Road (B&R)? Is this green halo effect somehow asymmetrical? What is the underlying mechanism? This paper systematically examines how China's OFDI exerts its influence on green technology spillovers, based on 56 B&R countries' 2003-2019 panel data. This study makes three significant findings: Firstly, China's OFDI has positive asymmetric characteristics in promoting green technology spillovers to host countries mentioned, which have lower income levels and openness. Secondly, strict relative environmental regulation can act as a "pressure pool," significantly enhancing the "green halo effect"; Thirdly, China's OFDI can help host countries obtain more green technology spillovers through three channels: expanding host countries' economic scale, upgrading host countries' industrial structure, and suppressing host countries' use of non-renewable energy. These findings point the way for 56 host countries to better accessing green technology spillovers.