Direct Investment In China Research Articles

Spatiotemporal Changes and Location Choice of Foreign Direct Investment in China

Foreign direct investment (FDI) has been pouring into China for decades. This article analyzes the spatial distribution and mechanism of FDI inflows to Chinese city-regions, combining location theories with the Chinese context. It provides a fresh perspective for understanding spatial FDI inflows in China. The spatial pattern of significant clustering features in FDI inflows remains, but it has shown a weakening trend over the past two decades. The Yangtze River Delta has grown as the largest agglomeration region of FDI in China. The great regional development in midwest China has brought large amounts of FDI to inland cities as well. These are atypical cases, though, as spatial dependence of FDI inflows based on geographic proximity is insignificant on a national scale. Local economic factors like energy supply, market consumption, and labor wages play roles in the spatial FDI inflows. This work can enrich the research practice and deepen the knowledge of spatial inequalities of FDI in the Chinese context.

China’s high-tech exports in 2000—2020

The article examines the trends of China’s high-tech exports in 2000—2020, and identifies the main channels of technology acquisition by the Chinese economy. The main factors affecting China’s high-tech exports are high-tech imports, foreign direct investment in China, the country’s gross domestic expenditure on R&D, and the exchange rate. Meanwhile, technology imports, incoming foreign direct investment and China’s gross domestic expenditures on R&D are the channels of technology acquisition for the Chinese economy. Statistically significant correlation coefficients with the growth rate of the share of high-tech goods in PRC exports were obtained for the following indicators: the growth rate of the share of gross domestic expenditures on R&D in GDP, the growth rate of the share of high-tech goods in imports and the growth rate of the share of foreign direct investment in GDP. The important role of gross domestic expenditures on R&D in the development of China’s innovations should be recognized. R&D is actively applied in China in situations where it is difficult or impossible to access the necessary knowledge as part of participation in international technology exchange.

Impact of Exchange Volatility on Foreign Direct Investment in China: An Empirical Analysis

China has become more significant in international commerce as the global economy and globalization have advanced. China's economy has risen to become the worlds second biggest since the "reform and openness " and "five-yearplan " were implemented. Foreign Direct Investment (FDI) became a key element o f developing market socialism in China throughout the era ofeconomic growth. The goal o f this research is to evaluate the effect o f exchange rate volatility on FDI flows. In global business, FDI plays a unique and increasing role. For the selection o f the model's lag duration, the Akaike Information Criterion (AIC) is employed. The Auto Regressive Distributed Lag (ARDL) model is used to investigate the effect o f the Chinese exchange rate on FDI. As a whole, thefindings o f the estimations are compatible with theoretical predictions. The findings reveal that the exchange rate has a statistically significant negative influence on foreign direct investment. In other words exchange rate volatility has anunfavourable effect on foreign direct investment. In short the currency volatility o f the host country leads to decrease the FDI flows into that country.

Social Environment and Healthy Investment Behavior: Joint Influence of Culture and Institution on China.

The influence of the social environment on healthy investment behavior is a vital research topic. This paper focuses on foreign direct investment (FDI) as an important part of its broad impact in improving the level of capital circulation and diversifying the non-systemic risk of a single country portfolio. Using data from 35 countries on direct investment in China, we find that the impact of the social environment on healthy investment behavior is mainly reflected in investors’ resistance to cultural distance and their benefit compensation across institutional distance. In addition, their joint influence is still negative, dominated by cultural distance, which can still verify that institutional distance mitigates the negative effect of cultural distance on FDI. Therefore, in order to promote international healthy investment behavior, it is feasible to improve both the mitigation effect of the institution in the short term and promote the level of cultural exchange in the long term, according to the research results of this paper.

Foreign Direct Investment and Economic Environment—Based on the Evidence of ASEAN Countries

Using the data onto foreign direct investment and the index of economic freedom, investment freedom, freedom of trade, monetary freedom and commercial freedom, this paper analyses the foreign direct investment in China and the ASEAN countries and five degrees of freedom. The results show that, after eliminate heteroscedastic, commercial freedom, monetary freedom and economic freedom significantly enhance a country's foreign direct investment, freedom to trade and to invest can inhibit foreign direct investment in a country. The 2009 global financial crisis also played a significant role in the impact on economic freedom of foreign direct investment, in which business freedom had a negative effect of a harsh international environment and a difficult domestic economy, while trade freedom was here It has played a positive role in the normal trade, but also eased the domestic economic environment and promoted the inflow of foreign direct investment.On this basis, the relevant policy suggestions of foreign direct investment and economic liberalization in China and ten ASEAN countries are drawn.

Top Management Team Diversity and International Expansion: Spanish Companies in China

This study investigates the relationship between diversity in the Top Management Team (TMT) of Spanish firms and the firms’ willingness to further expand in China, as a proxy for their international success. Data from Spanish companies with direct investment in China were collected through a questionnaire. Regression analyses were carried out to test the differential influences of multiple forms of TMT demographic diversity (age, gender, tenure, and functional experience). The moderating effect of conflict in an uncertain environment is also examined, as this offers potentially novel insights into the determinants of success in emerging countries. Results show that the effects of TMT diversity on international success are very much influenced by the perception of the conflict related to investment in a non-traditional market. The findings highlight the relevant negative role that conflict can exert in diverse TMTs in a growing developing economy.

Familiar Strangers: Lineage Connection and Diaspora Direct Investments in China

Familiar Strangers: Lineage Connection and Diaspora Direct Investments in China

Effect of Precipitation on Location Choice of Foreign Direct Investment in China

This paper studies the effect of precipitation on the location of foreign direct investment (FDI) based on city-level data of China from 2003 to 2018. The results show that precipitation has a significant promoting effect on the regional agglomeration of FDI. This indicates that FDI location selection is more inclined to use the dilution ability of precipitation for pollution to reduce environmental costs, rather than relying solely on water resources. Further analysis shows that the preference of FDI enterprises on precipitation in the eastern region is significantly lower than that in the central and northeastern regions. This reflects the trend that FDI enterprises gradually shift to regions with a low degree of environmental regulation to reduce environmental costs. Therefore, the efforts made by economically developed cities to improve the regional ecological environment may be offset by the location adjustment of FDI enterprises, and precipitation has become an important stimulus for the location transfer of FDI enterprises.

Analyzing IKEA’s International Investment in China Based on the Theory of International Production Compromise

This study analyzes IKEA’s localized operation in China through the eclectic theory of international production. Firstly, the development history of IKEA is discussed along with its development in China. Secondly, IKEA’s direct investment in China is analyzed from the perspective of IKEA’s eclectic theory of direct investment in international production, the corporate ownership, internalization, and location advantages of the company, in addition to the challenges of IKEA’s investment and operation in China, hoping to enlighten the process of formulating overseas expansion strategies for foreign direct investment. This study aims to guide students to strengthen their skills in formulating and implementing strategies in regard to the international investment process of multinational companies. On the one hand, they can analyze the strategies used and challenges faced by IKEA in its international investment in China to stimulate their thinking on the international investment of Chinese enterprises; on the other hand, they can also strengthen their understanding of the international investment theory by analyzing IKEA’s international investment in China. This study hopes to enhance students’ understanding and application skills in regard to companies’ transnational operations.

Gravity of intermediate inputs in productivity spillovers: Evidence from foreign direct investment in China

AbstractThe literature on the effect of multinational firms on the productivity of domestic firms has received wide attention; however, the exact channel of productivity spillover at a more micro firm level is underexplored. Based on a multisector production model, we examine heterogeneous productivity spillovers through the channel of upstream foreign direct investment (FDI) inputs at the firm level. We construct a firm‐level distance statistic for the upstream FDI and estimate the gravity of inputs: A firm is more productive if it gains access to more FDI inputs (general productivity‐enhancing effect) and is geographically closer to upstream FDI firms (proximity effect). We find in the 2000–2007 Chinese firm data that (i) if a domestic firm’s FDI input share increases by 1 percentage point, then its productivity is increased by 2.02%, and (ii) if the firm’s distance from upstream FDI firms is 10% greater, then its productivity is reduced by 0.59%. The results are robust after controlling for FDI firm location selection bias and other productivity spillover channels.

The Impact of Smart City Construction on the Quality of Foreign Direct Investment in China

As a new model of urban development, it is important to scientifically analyze the impact of smart cities on the quality of foreign direct investment (FDI). This article constructs a difference in differences’ model to test the impact of foreign direct investment quality in smart city construction based on panel data of 226 prefecture-level cities from 2006–2017. Study shows the following. (1) The construction of smart cities has significantly improved the quality of FDI utilized in pilot cities. (2) Heterogeneity analysis shows that smart city construction significantly contributes to the quality of FDI in the western city subsample and a subsample of cities with low natural resource dependence. After a series of robustness tests and placebo tests, the above conclusions still hold. The results of the study suggest that China should further promote the construction of smart cities to optimize the quality of foreign direct investment and promote high-quality economic growth. The findings of the study also provide theoretical and practical references for the construction of smart cities in China and other countries around the world.

Analysis and Construction of EEMD Smart Model and Fuzzy Forecasting through Improved Bayesian Estimation

Different portfolio models will have a great impact on the model rate of return. In order to meet the data needs of portfolio investment forecasting, a big data generation method based on incremental Bayesian network model is proposed. Firstly, the fuzzy interval number is constructed by using the global GM (1pare 1) prediction model, then the fuzzy Mmurv model is established based on the interval fuzzy number, and the model is optimized based on the midpoint, radius and acceptability of the interval number, thus a single objective programming model with parameters is obtained. The future data is partially generated by using the time series generation algorithm, and the Bayesian network model trained by historical data is updated with the newly generated data. So that the updated Bayesian network can reflect the relationship between the variables and the laws contained in the new and old financial data in this period of time. And use the model to predict the amount of foreign direct investment absorbed by China in 2020, test the robustness and analyze the impact of major random events to show the reliability of the prediction. The analysis is carried out on multiple scales. The results show that the integration of IMF1 and IMF2 components through the white noise test can be regarded as the random impact of external factors; the cycle length of IMF3 component is about 3 years, which can be regarded as the inventory cycle caused by the change of enterprise inventory; the cycle length of IMF4 component is 5 years, which can be regarded as political cycle; the cycle length of IMF5 component is about 20 years, which can be regarded as construction cycle. The set of portfolio paths is generated by path search algorithm in Bayesian network, and the big data set with real data characteristics is generated according to the probability distribution of each path. The experimental results show that the method is feasible and ensures a certain accuracy. The forecast results show that the amount of foreign direct investment in China will continue to fluctuate seasonally and in a trend in recent years.

Export spillover from foreign direct investment in China during pre- and post-WTO accession

This study investigates the effects of export spillover from foreign direct investment (FDI) before and after China’s World Trade Organization (WTO) accession, with particular consideration of the FDI source country and firm ownership structure. It uses a Chinese manufacturing firm-level panel dataset, for the period 1998–2007. In general, there are no spillover effects among state-owned enterprises (SOEs). This study finds negative horizontal and positive vertical spillovers associated with FDI from Hong Kong, Macao, and Taiwan (HMT) among non-SOEs. Furthermore, non-HMT FDI, which is predominantly from the Organisation for Economic Co-operation and Development (OECD) countries, have statistically significant positive horizontal and vertical spillover effects on the export performance of private Chinese firms. Positive forward spillovers occurred only after China joined the WTO, while positive backward spillovers existed during both the pre- and post-WTO periods. China’s entry into the WTO intensified the forward linkage of production, implying that greater availability of high-quality inputs produced by non-HMT foreign multinationals benefited the export performance of private domestic firms.

Factional politics and foreign direct investment in China

This article uses quantitative analysis to discuss the effects of the Chinese Communist Party’s factional politics on the regional distribution of foreign direct investment inflows from 1993 to 2017. Empirical evidence shows that provincial leaders’ personal connections with the CCP’s incumbent general secretary had positive and statistically significant effects on the annual growth rate of provincial foreign direct investment inflows. These effects were more salient in inland provinces and during Xi era. These findings challenge the conventional wisdom about the evolution of institutions under the leadership of the Chinese Communist Party and demonstrate the importance of informal politics in promoting China’s economic reform and prosperity.

Dialect Diversity and Foreign Direct Investment in China

AbstractThis paper examines the relationship between dialect diversity and foreign direct investment (FDI) using a dataset of 230 Chinese cities for the period 2000–2014. We find that dialect diversity and FDI absorption are negatively correlated. However, this negative relationship disappears gradually over time. Several underlying mechanisms are identified. In particular, it is found that dialect diversity impedes human capital development and hence obstructs FDI absorption. Our results also show that there are threshold and spatial spillover effects. This research increases knowledge of FDI location choice and has implications for foreign investment policymaking.

Foreign Direct Investment in China and the Sino-US Trade Imbalance

As economic globalization is deepening, a new international division of labor emerges, which is, to a large extent, realized in the form of FDI. Sino-US trade is in the state of fast development, and foreign direct investment in China also goes through large-scale expansion in the meantime. With its huge market potential, broad development prospects and increasingly improved investment environment, China has attracted an increasing number of foreign investors to invest in China, thus China is gradually becoming a great power utilizing foreign investment. Foreign-funded enterprises in China play a significant role in the import and export trade between China and the United States and the development of Sino-US trade. The rapid growth of China-US trade is largely benefited by the rapid development of foreignfunded enterprises in China. In the long run, foreign direct investment in China has a great impact on Sino-US import and export trade. In this paper, the correlation between the volumes of foreign investments in China during the period between 1983-2019 and the Sino-US import and export trade is analyzed, and based on the co-integration relationship between foreign direct investment in China and the Sino-US import and export trade, it comes to a conclusion that foreign direct investment in China plays a catalytic role in both import and export trade between China and the United States, that is, foreign direct investment has a stimulating effect on Sino-US import and export trade, resulting in China’s ever-expanding trade surplus with the United States.

Research on Foreign Direct Investment in Service Industry

Under the national policy goal of increasing labor income and increasing employment rate, the service industry is expected to be a powerful engine for stimulating economic growth, optimizing industrial structure and absorbing employment, while foreign direct investment is playing an important role in promoting industrial upgrading and improving efficiency. This article first analyzes the trade effects of multinational companies in the service industry based on monopolistic advantage theory, product life cycle theory, internalization theory and the eclectic paradigm of international production, and then introduces the development status of foreign direct investment in China’s service industry. The study found that under the premise of ensuring the national economy and social security, corresponding policies should be adopted in the introduction of investment in specific industries to correctly guide the flow of foreign capital so that it can serve to optimize the industrial structure of the service industry.

Capital Account Liberalization and Capital Movement in China

Capital account liberalization has always been at the core of economic policymaking. China is a country which has chosen to go gradual in opening up the capital account. The present research seeks to manoeuvre aspects of capital account liberalization for the Chinese economy. An empirical investigation is run for ascertaining the particular influence capital controls has had on foreign direct investment in China which has outpaced other capital flows in the past decades. The model applied involves foreign direct investment inflows as the dependent variable while four variables are independent. The stationarity of the univariate series is checked with the use of Augmented Dicky Fuller test. The study concludes with theoretical understanding that full liberalization of the current account in China has overall benefited the economy. The outcome of the study suggests that there is no significant bearing of current account liberalization on foreign direct inflows.

Китай на мировых рынках капитала

The article is analyzing the positions of China in global capital markets, and the factors that determine them. It shows the trends and features of attracting foreign direct investment in China, exporting Chinese capital abroad, attracting portfolio investments to China. The investment aspects of the Chinese Belt and Road Initiative and the role of Hong Kong as an international financial center are also considered. The evolution of the currency market regulation in China and the dynamics of the Yuan exchange rate, as well as the internationalizing of the Chinese currency and its use in cross-border operations are also discussed. The authors believe that the prospects for strengthening China’s position in the global capital markets will be determined by a number of circumstances, including the dynamics of the world economy, the growth rate of the Chinese economy, and the consistent liberalization of conditions for cross-border capital movement in China. The maintaining of higher growth rates of the Chinese economy in the context of the global recession and the coronavirus pandemic, as well as the ongoing liberalization of the domestic capital markets, suggest that the Chinese economy will remain attractive for foreign investors. The export of Chinese direct investment abroad will be largely determined by the dynamics of the country’s foreign trade, national restrictions on the export of capital, the implementing the Belt and Road Initiative and the position of China’s leading economic partners, primarily the United States, towards Chinese investment. At the same time, increased geopolitical and country risks will affect the geographical structure of China’s investment abroad in the direction of enhancing cooperation with Asian countries and participants of the Belt and Road Project. In the context of aggravated relations with the United States, China will make efforts to reduce dependence on the US dollar in settlements. Further steps will also be taken to internationalize the Chinese national currency and to achieve an increase in the use of RMB in payments. The lifting of restrictions on cross-border portfolio investments in the PRC is predetermined by ensuring the domestic macroeconomic stability, strengthening the financial system, low inflation, affordable credit, a stable balance of payments, and sufficient foreign exchange reserves. China’s real entry into the world’s leaders, both in the global commodity and capital markets, requires the creation of its own technological base, the transition to a new energy-saving, environmental-friendly national economic structure based on knowledge and new technologies, balancing the development levels of the country’s regions, and increasing the average per capita income of people.

Dynamic Discrete Choice Models with Incomplete Data: Sharp Identification

In many empirical studies, the states that are relevant for economic agents to make decisions may not be included in the data to which researchers have access. This problem often arises in the context of monotone industries. In this paper, we develop the sharp identified sets of structural parameters and counterfactuals for dynamic discrete choice models when empirical data do not cover realizations of relevant states. We use simulation studies to confirm the theoretical property of the sharpness. Applying the proposed method to the annual Toyo Keizai database, we study the behaviors of Japanese firms on foreign direct investments in China without observing the future states after Chinese economy slows down.