Chinese Foreign Direct Investment Research Articles

The effects of China's Belt and Road Initiative investments on mitigating climate risks in partner countries

The One Belt, One Road (OBOR) program is a major step toward making the idea of a worldwide community that shares common interests a reality. Nevertheless, a number of OBOR member nations are located in areas that are particularly vulnerable to the effects of climate change. The infrastructure developments linked to the OBOR program have prompted several Western countries to express concern that these nations may become even more vulnerable to the effects of climate variability. The impact of Chinese foreign direct investment (FDI) on climate change risks in OBOR member nations is explored in this article, which also analyzes the processes at work. Examining panel data from 65 partner countries spanning 2004–2020, this research examines how China's FDI affects host countries’ capacity to handle climate change risks, with a particular emphasis on each country's vulnerability risk. Important results from the research comprise: China's direct investment in OBOR regions strengthens the climate resilience of partner countries by reducing their vulnerability to climate change. Countries with lower or medium incomes, those in close proximity to China, and those that have free trade agreements with China feel the benefits of Chinese investments more acutely. Consistent with OBOR's guiding philosophy of sharing development outcomes and promoting global governance, the positive impacts of OBOR investments can be explained in part by rising incomes and stable governments. Contrary to claims of “carbon emissions transfer” and evidence that environmental sustainability is central to the OBOR project, investments made under the OBOR have decreased climate vulnerability without increasing local carbon emissions. The research findings and policy suggestions in this article provide light on the current function of China's OBOR program and suggest ways to ensure its long-term viability.

Between Discourse and Field: The Socio‐Environmental Impacts of Chinese Foreign Direct Investment in Indonesia's Palm Oil Sector

ABSTRACTIndonesia's palm oil industry, the world's largest supplier, faces significant scrutiny because of its severe environmental and social impacts. The expansion of Chinese companies in this sector has raised concerns about exacerbating existing problems. This study examines the case of Jade (pseudonym), a Chinese‐owned palm oil company, to assess the socio‐environmental consequences of Chinese investments in Indonesia. Employing a dual methodology combining an analysis of public discourse with primary field data, the research reveals the complexity and contradictions within Chinese, global and local perspectives on the company's operations, highlighting a collision of priorities: Economic growth, environmental protection and governance reform. At the field site, unresolved land disputes and weak governance have created a fragile balance between local resistance and the company's partial compromises. Although Chinese companies are often perceived as autonomous entities advancing national interests, this study underscores how their activities are deeply embedded in Indonesia's political, historical and cultural contexts, exposing them to systemic challenges in the palm oil sector. The study also critiques the ‘global ecological civilisation’ concept, arguing that China's non‐interference stance, by avoiding engagement with entrenched local conflicts, risks undermining efforts to achieve meaningful socio‐environmental progress.

Making Hard Power Soft: Chinese Foreign Direct Investment and Public Opinion in Chile

Making Hard Power Soft: Chinese Foreign Direct Investment and Public Opinion in Chile

Friend or Foe? Partisanship, Rivalry, and Overseas Foreign Direct Investment in the United States

ABSTRACTObjectiveThis article revisits how political partisanship and home and host‐state relations affect foreign direct investment (FDI) inflows.MethodWe use panel data for overseas Chinese and South Korean FDI into the United States from as early as 2006 to 2022.ResultsWe observe differences in Chinese and South Korean FDI, finding that Chinese firms prefer Republican‐governed states because of the lower economic costs and higher political safety sought by rival countries. Conversely, South Korean firms favor investing in states with divided governments since both Democrats and Republicans will want to take credit for the job creation from a U.S. ally, offering greater financial incentives to South Korean businesses. Divided governments also increase policy stability, benefitting South Korean firms. We also conduct robustness checks and assess the politics of the FDI mode of entry, and the results confirm our main findings.ConclusionOur study offers nuance into how partisanship and foreign relations between home and host states affect political risk and FDI.

MONEY OR SOVEREIGNTY: THE IMPACT OF CHINESE FOREIGN DIRECT INVESTMENT ON CAMBODIA

This paper examines the implications of China's massive foreign direct investment (FDI) in Cambodia through the lens of Dependency Theory. Drawing on the theoretical perspectives of Theotonio Dos Santos and Fernando Henrique Cardoso, this study analyses how China's capital hegemony and foreign financing have led to Cambodia's dependence on Chinese investment. The findings reveal that the influx of Chinese FDI, while contributing to economic growth and infrastructure development, has also resulted in negative consequences across political, socio-cultural, environmental, and socio-economic dimensions. The dominance of Chinese investment has undermined Cambodia's governance, eroded local autonomy, exacerbated corruption, marginalized local communities, and caused environmental degradation. This study argues that Cambodia's reliance on foreign capital, compounded with inadequate governance, has perpetuated its dependency on China, compromising its sustainable development and national interests. This study emphasizes the importance for Cambodia to reduce its dependence on foreign investment, strengthen domestic economic capacity, and prioritize national interests through sound governance and regulatory mechanisms to mitigate the negative impacts of FDI.

Global Capital, Local Dynamics: Unravelling Labor Relations in Chinese Foreign Direct Investment within South Africa's Industrial Relations

South Africa has attracted foreign direct investment (FDI) worldwide, providing a window to the African continent. China has significantly expanded its regional investment as one of South Africa’s critical development partners. However, as Chinese investments deepen their engagement, concerns regarding labor relations and workers’ rights have surfaced. The China-Africa research on labor issues tends to focus on daily interactions while often neglecting to examine the dynamics and conflicts among various stakeholders. This study explores these issues in a Chinese manufacturing business in South Africa by unveiling the interactions between local governments, labor unions, and Chinese FDI. Interviews and documentary research were conducted to gather relevant information. This study finds that despite the setup of a national minimum wage, collective bargaining, and the intention to increase social equality in South Africa, there is still a concern that FDI could contribute to a new cycle of labor struggles and that it could perpetuate inequality.

Economic complexity in Africa: the role of Chinese FDI and trade

PurposeThis study aims to examine the effect of Chinese foreign direct investment (FDI) and trade on economic complexity in Africa.Design/methodology/approachPanel data from 34 African countries between 2003 and 2022 are used. This study analyzes the data using a two-stage least square proposed by Lewbel (2012) and Driscoll and Kraay (1998) estimator based on robust standard errors and panel quantile regression via moments proposed by Machado and Silva (2019).FindingsThe results show that Chinese FDI and trade effectively upgrade economic complexity in Africa. Also, there is an inverted-U-shaped relationship between Chinese trade and economic complexity, thus revealing evidence of the trade Laffer curve.Originality/valueDespite the intense debate on the Chinese-African economic relationship, to the best of the authors’ knowledge, no known study has examined the implications of Chinese FDI and trade on economic complexity in Africa. Therefore, this study fills this lacuna found in the literature and suggests that Chinese FDI and trade are veritable tools for technology diffusion and innovation, which are capable of upgrading economic complexity in Africa. However, the Chinese-African trade relationship should be complemented with sound trade policies for the sustainability of the beneficial effect of Chinese trade on economic complexity in Africa.

Disposable diaper consumption and waste in urban Ghana and Kenya: The role of manufacturing, distribution, and branding

Studies have reported widespread disposable diaper (DD) consumption in parts of urban Africa, increasing municipal waste generation and with mismanaged DD waste impacting water quality. However, the DD manufacturing and distribution systems behind this trend are little studied, yet understanding these underlying systems is critical in informing efforts to promote extended producer responsibility. This study therefore aims to assess DD brand preferences and trends in international trade in absorbent hygiene products in two case study Sub-Saharan countries. A cross-sectional survey was undertaken of 440 carers of children aged 0–36 months attending health facilities in Greater Accra, Ghana and Kisumu, Kenya. Survey analysis was supplemented by analysis of international trade in absorbent hygiene products for both countries from 2000–2021. Trade data showed DD imports to Ghana and Kenya increased from 2000–17 particularly from China, but declined thereafter. This coincided with Chinese foreign direct investment establishing DD production facilities within both countries in 2018–19, and increased DD exports from Kenya and Ghana to surrounding countries. Meanwhile, 93.0% and 94.2% of survey respondents in Greater Accra and Kisumu respectively reported using DD. In Greater Accra and Kisumu respectively, 62.4% and 45.3% of survey participants reported using the brand produced by these new domestic manufacturing facilities, with 29.8% and 40.9% using imported brands. In Greater Accra, approximately half of reported imported brands were unregistered with the regulator. Given its market dominance, we therefore recommend engagement with the leading manufacturer to identify product or waste management innovations to address water pollution from DD waste. We also recommend similar engagement with imported brand manufacturers and greater DD import regulation in Ghana, given lack of imported brand registration.

Making Hard Power Soft: Chinese Foreign Direct Investment and Public Opinion in Chile

Making Hard Power Soft: Chinese Foreign Direct Investment and Public Opinion in Chile

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

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

Macro-locational determinants of Chinese foreign direct investment in Cameroon

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.

Strategic Opportunities for Russian-Chinese Cooperation in Tourism in the Context of the Implementation of Large Cross-Border Projects

The purpose of the study is to identify the strategic opportunities for Russian-Chinese cooperation in the field of tourism in modern geopolitical situation, which have initiated a number of large foreign investors leaving the domestic tourism market and at the same time the formation of strategic niches for Chinese foreign direct investment in the economy, in particular, in the Russian tourism industry. Forming a favorable investment environment is an essential condition for stimulating business activity in the eastern regions of the Russian Federation for the government to undertake. On the other hand, the strategies and programs of the border regions of the Russian Far East development define the task of finding the optimal economic presence of China in key sectors of the country’s economy. The theory of strategy and methodology of strategizing by academician V. L. Kvint is defined as the theoretical and methodological basis of the study. According to the theory of strategy the primary thing when developing a new or adjusting an existing strategy of the object is to analyze trends, after that the external and internal environment, identify opportunities and determine strategic priority directions for the development of the strategized object.As a result of the research, the features of the development of Russian-Chinese cooperation in the field of tourism were determined, the portrait of the target Chinese tourist was formed, the strategic assessment of the level of infrastructure support for tourism development in the border regions of Russia and China and the strategic analysis of the regulatory and legal support for the development of Russian-Chinese tourism were carried out, the strategic priorities for infrastructural support of cross-border tourism were identified and proposals for the strategic development of cross-border Russian-Chinese tourism were formulated in general terms. The presented strategic directions and proposals for the cross-border tourism development will make it possible to realize the tourism potential of two states.

New Architecture of Foreign Direct Investment Regulation in the European Union

This article examines current trends in financial governance within the European Union (EU), focusing on the regulation of foreign direct investment (FDI). The adoption of supranational mechanisms for EU FDI screening through Regulation 2019/452 not only highlights the expansion of multi-level governance, as promoted by the European Commission, but also reconfigures the EU's role as a global actor in investment transactions. This shift directly impacts a wide range of stakeholders.The study aims to explore the institutional architecture established by Regulation 2019/452 and address the research question: Why has the EU transitioned from a neoliberal approach favoring free capital movement (positive integration) to a framework emphasizing common European monitoring rules (negative integration)? The theoretical framework combines the concept of multi-level governance and securitization theory, underpinned by new institutionalism, which facilitates an analysis of how institutions, particularly the European Commission, articulate and advance common interests within political frameworks. The findings reveal that the securitization of Chinese FDI served as a critical tool for the Commission to legitimize its push for supranational regulation. Regulation 2019/452 is identified as “entry-level legislation,” designed to be amended through its built-in revision mechanism, ultimately broadening the Commission’s exclusive competencies in this area. This trajectory was partially confirmed by the Commission’s January 2024 proposal to strengthen the Regulation. The analysis situates this shift within a broader global context, demonstrating how the EU's move from neoliberalism to protectionism mirrors trends in other major economies, such as the United States, China, and India, all of which employ FDI monitoring mechanisms. The article also identifies key events that acted as catalysts for the EU’s geopolitical reassessment of foreign investment—from a stance of openness to recognizing potential threats to collective security and public order. It draws a parallel with the Commission’s use of securitization discourse in the energy sector, which contributed to the partial communitarization of energy policy through multi-level governance.

China's Investment in Bangladesh: Backdrop of Debt Trap Diplomacy

This research investigates the implications of Chinese investment in Bangladesh, particularly in the context of concerns surrounding debt trap diplomacy. As China extends its Belt and Road Initiative (BRI), Bangladesh has emerged as a significant recipient of Chinese loans and investments, encompassing infrastructure projects such as ports, power plants, and highways. While these investments are poised to bolster Bangladesh's economic development, they also raise concerns about the potential for unsustainable debt levels and the erosion of sovereignty. This study delves into the economic, political, and social ramifications of Chinese investments in Bangladesh. Through a mixed-methods approach combining quantitative analysis of debt sustainability indicators and qualitative assessments from stakeholder interviews, the research examines whether Chinese funding is leading to a debt trap scenario. Preliminary findings suggest that while Chinese investments have accelerated infrastructure development, they have also increased Bangladesh's debt burden and dependency on China. Furthermore, the strategic placement of investments suggests potential geopolitical motivations behind Chinese funding. This research aims to contribute to the broader discourse on the impact of Chinese foreign direct investment in developing countries, offering policy recommendations for Bangladesh to navigate the complexities of foreign financing without compromising its economic sovereignty. The study underscores the necessity for rigorous debt management and transparent investment policies to mitigate the risks associated with large-scale foreign loans.

Evaluating the Impact of Chinese FDI in the Energy Sector on Green GDP Growth: A Spatial Econometric Analysis of MENA Countries

This study analyzes the impact of Chinese foreign direct investment (FDI) in the energy sector on the green GDP (GGDP) growth of seven Middle East and North Africa (MENA) countries based on data from 2009 to 2019. Using panel regression analysis, the study focuses on the effects of FDI, economic development level, population size, energy consumption structure, environmental regulation intensity, government fiscal expenditure, and the KOF Economic Globalization Index on GGDP growth. By comparing fixed-effects and random-effects models and applying the Hausman test to select the most appropriate model, the research indicates that the random-effects model is the most suitable. The results show that FDI, economic development level, and population size have significant positive effects on GGDP, while shifts in energy consumption structure also promote sustainable economic growth. In contrast, environmental regulation intensity and the globalization index have no significant impact on GGDP, suggesting that GGDP growth in MENA countries relies more on internal economic policies and the efficiency of resource allocation.

Assessing the Effects of Chinese Foreign Direct Investment on Green GDP Development in North and South American Regions

This study aims to investigate the impact of foreign direct investment (FDI) on the growth of green GDP (GGDP) in North America and South America. The research is based on a comprehensive dataset covering the period from 2009 to 2019, drawn from multiple countries. By employing a two-way fixed-effects model, the study analyzes the effects of key factors, including FDI, trade openness, economic development level, urbanization level, population size, and industrial structure on GGDP growth.The findings indicate that, in North America, both FDI and the level of economic development exert a significant positive influence on GGDP growth, whereas trade openness demonstrates a negative impact, suggesting that increased trade activities may exacerbate environmental pressures. In South America, while the level of economic development shows a significant positive correlation with GGDP, the effect of FDI is not statistically significant. The study recommends that policymakers focus on enhancing the effectiveness of foreign investment and implement stricter environmental protection policies to ensure that trade activities do not adversely affect the environment. Furthermore, there is an urgent need to adjust the current industrial structure to promote a transition toward more sustainable development models. Ultimately, this research emphasizes the importance of ensuring environmental sustainability while fostering foreign investment and economic growth to achieve long-term growth in green GDP.

The Normative Influence of the Belt and Road Initiative in Europe

This article analyses how the Belt and Road Initiative (BRI) is used as a tool to spread Chinese normative language and soft power in the European Union (EU), as well as the potential governance effects of the BRI. Through in-depth elite interviews and comparative qualitative analysis of the BRI Memoranda of Understanding (MoUs) between EU countries and China, it provides a comprehensive overview of the content of the MoUs, most of which are not publicly available. It finds that, while little normative influence can be seen, the MoUs represent a partially successful exercise of soft power. However, growing scepticism and even resentment towards China are emerging among EU BRI countries. This, paired with the securitisation of Chinese foreign direct investment that originated from the paradigm shift in EU trade policy towards economic security, has led to greater unity in the EU and a more antagonistic vision of China by its Member States.

Emerging Chinese Foreign Direct Investment in Brunei

Since the announcement of the Belt and Road Initiative, Brunei Darussalam and China have strengthened economic and trade connections by establishing the Brunei-Guangxi Economic Corridor and engaging in various multilateral platforms for China-ASEAN cooperation, notably the China-ASEAN Expo. This article assesses the achievements of Chinese foreign direct investment in Brunei, addresses ongoing challenges and provides insights into the current status and prospects of the bilateral cooperation.

Factors determining the emergence of environmental concerns regarding Chinese investment in the South America's extractive industries

Factors determining the emergence of environmental concerns regarding Chinese investment in the South America's extractive industries

Efekty spillover chińskich inwestycji zagranicznych w Angoli i Zambii

SPILLOVER EFFECT OF THE CHINESE FDI IN ANGOLA AND ZAMBIAIn recent years, Chinese foreign direct investment (FDI) in Africa has attracted interest from both academia and the wider political world. Some postulate that Chinese companies – unlike Western corporations – have greater potential to initiate and carry out the structural transformation of the continent. Some researchers even indicate that thanks to the inflow of Chinese FDI, Africa may become “the next factory of the world”. The aim of this article is to analyse external effects (also called spillover effects) related to Chinese FDI in Africa using the examples of Angola and Zambia. According to the current state of knowledge, spillover effects are the most desirable effects of FDI in the host country, because the related increase in the productivity of local enterprises is key to the occurrence of structural transformation in local economies. The subject of the analysis presented in this article are three aspects (determinants) of spillover effects: (i) the potential of Chinese FDI to generate spillover effects, (ii) the absorptive capacity of local companies and (iii) local institutional settings favouring the occurrence of spillover effects. The findings indicate that due to the existence of weak and few linkages between foreign investors and local firms, spillover effects occur rarely and are relatively small. They are also not sufficient to initiate the transfer of valuable knowledge and technology. The presented research results were based on over 150 in-depth interviews and two rounds of surveys conducted among Chinese investors, Angolan and Zambian companies and representatives of local authorities.