Chinese Direct Investment Research Articles

Drivers of China’s Foreign Direct Investment into Africa

We assess the determinants of Chinese direct investment in Africa compared with those of global FDI. We find that economic size and macroeconomic stability are positively correlated with Chinese and global FDI in Africa. Institutional variables, such as accountability and rule of law, are not significant in either case and the same can be said about FDI-aid complementarities. The presence of oil is a determinant of Chinese FDI but not of global FDI into Africa. Conversely, the openness of the economy is a determinant for global FDI but not of Chinese FDI, which appears to favour closed economies possibly due to industrial organizational concerns. While these differences accord with intuition, we find no evidence for the claim that Chinese FDI in Africa is related to non-economic governance in a specific way that differs from global practice. More refined governance indicators should be used to verify whether Chinese and global FDI into Africa remain indistinguishable on this score: we plan to do this in future research.

Investimenti diretti cinesi in Italia: da ruscello a fiume?

- Chinese outbound direct investments have experienced a strong increase in the last five years, spurred by the "Go Abroad" policy launched by the Chinese Government in 2002. Europe still ranks at the bottom of the list among the destinations of Chinese direct investments, but it is the fastest growing one. Within Europe, Italy is a late comer in attracting Chinese investments, but has been catching up quickly in the last few years. Investments have been made mostly in the logistics and in the manufacturing sector. In 2008 the acquisition of Cifa, a leading producer of cement-working machines, by Zoomlion signalled an important step in the history of Chinese investments in Italy. It is the largest Chinese acquisition in Europe so far and for the first time the Chinese investor is looking at integrating foreign management into its own managing structure. On average the size of Chinese companies investing in Italy is much larger than that of Italian companies looking at China for expansion. Furthermore, Chinese firms are focusing increasingly on manufacturing companies and are shunning those that do not appear in good shape. Acquiring a market share in Europe is the primary aim of Chinese companies investing in Italy, while the acquisition of technological skills plays a secondary role. Keywords: foreign direct investments, China, Italian industry, acquisitions Parole chiave: investimenti diretti all'estero, Cina, industria italiana, acquisizioni Jel Classification: F2

Ekspansja gospodarcza Chin w Afryce

In the recent years China has intensified its economic cooperation with the African countries in order to secure the new resource market. The trade between China and Africa has been expanding very quickly in the last few years and in September 2008, China’s customs authorities released an estimate of the value of bilateral trade at more than 100 billion dollars. For comparison the value of bilateral trade between China and Africa was in 2001 only 10,8 billion dollars. There also has been an enormous inflow of the Chinese direct investment into Africa. The most spectacular case of such investment was the take-over in October 2007 by the Industrial and Commercial Bank of China, one of the “Big-Four” state owned banks, a 20% stake in South Africa’s Standard Bank for 5,46 billion dollars. Earlier, in January 2006, state-controlled oil company China National Offshore Oil Corporation paid 2,3 billion dollars for a 45% stake in a Nigerian oil field. China’s economic expansion in Africa in viewed as the desire of that country to increase its presence on the black continent. Chinese authorities use the “noninterference” approach and are willing to form close partnerships with governments in Africa, which are considered unsavoury in the West, such as those of Sudan and Zimbabwe. Additionally, China’s aid and trade packages are not tied to any requirements for reform or government transparency and therefore undermine – mostly Western – efforts to encourage good governence. There are, however some fears that China will be a neocolonialist and simply use Africa as a resource market, taking away raw materials and selling fishined goods back to Africa, leaving Africans with depleted resources and no industry. There also are concerns that Chinese factories and mines in Africa will either use large numbers of Chinese workers instead of locals, or underpay and exploit local workers. The leaders of African states are learning from economic cooperation with China how to manage the relationship with China and adapt some elements of the Chinese economic model, different from the Western model, which in Africa has not yielded much fruit. However the African states should shape the common policy vis-a-vis cooperation with China in order to secure the best possible advantages from that cooperation.

Moving from Open Door to Go Global: China goes on the world stage

This contribution traces a relatively recent phenomenon: the development of Chinese Direct Overseas Investments. China's Go Global policy, which encourages Chinese enterprises to put themselves in the global competition through an active internationalisation process, was officially announced in 2000. Less known than the Open Door policy that led China to be one of the world's largest FDI recipients, this phenomenon, still small in comparison to the total global value, is interesting for its trend and skyrocketing growth. The paper not only sheds light on the five stages of the gradual development of Outward Foreign Direct Investment (OFDI), but also deepens several interventions launched during the entire year 2006. Relevant historical series of flows and stocks are also presented. Besides highlighting the 'Chinese Champions' of the global market, main forms of internationalisation and main reasons are discussed, as well as pros and cons of the process.

Empirical Determinants of Manufacturing Direct Foreign Investment in Developing Countries

Nearly all developing countries actively seek capital and technology from the advanced countries. Although private direct foreign investment (mainly in the form of multinational enterprise) is viewed with ambivalence by many developing countries, it is nonetheless true that direct investment remains a substantial source of capital and is sometimes the only source of specific technologies. Indeed, given the slow growth in official external assistance, developing countries are becoming more, not less, dependent on direct foreign investment. While disbursements of official development assistance by the OECD countries rose 43% from 1961 through 1970, direct investment flows rose almost 90% over the same period. In the later year, the flow of direct investment was more than two-fifths of all official assistance, $3.2 billion compared to $7.8 billion.1 Furthermore, the United States and other major capital exporting countries would prefer, for economic as well as ideological reasons, to channel more of their capital outflows to developing countries through private investment. It is highly probable, therefore, that developing countries will continue to rely on direct foreign investment in the foreseeable future to carry out their development programs. It is against this background that the present study seeks to identify the empirical determinants of direct foreign-investment flows in the manufacturing sectors of developing countries. Our purpose is to select from the many economic, social, and political features of a developing country those features that are critical to making that country attractive or unattractive to private foreign investors. Available empirical studies are limited