Foreign Direct Investment In China Research Articles

Effect of foreign direct investment on firms' pollution intensity: evidence from a natural experiment in China

Abstract This paper examines a causal relationship between foreign direct investment (FDI) and firms' pollution intensity by exploiting the policy of China's FDI access relaxation in 2002. The result shows that FDI leads to a significant reduction in firms' pollution intensity. The mechanism tests find that FDI reduces pollution intensity by increasing firms' productivity, pollution management abilities, and the output of lightly polluting firms. The effect primarily acts on firms in lightly polluting industries and firms in the eastern region. The findings support the pollution halo hypothesis and provide implications for developing countries like China by evaluating the effectiveness of policies to attract FDI.

The media in China–Africa public relations: Assessing China's attractiveness beyond economic development assistance

AbstractThis work explores China's African public relations and image‐building effort, focusing on Nigeria. Thus, the paper's purpose is twofold: first, to investigate whether China's conduct of public diplomacy through its soft power resource—development assistance—has effectively shaped positive Nigerian public perception of China, and second, to determine the media's role in advancing China's public diplomacy in Nigeria. Specifically, it explores the interaction of economic development assistance, media, and public relations. I do this by comparing China's foreign direct investment (FDI) in Nigeria (2010–2019) with the public's perception of the FDI's influence on the Nigerian economy (2016 and 2020) and the media's role in shaping public support toward the investments. Utilizing a range of datasets, I find that Chinese economic investment alone is insufficient to substantially shape positive Nigerian public perception of China. Within a framework of mediated public diplomacy, I demonstrate that the Chinese image‐building effort in Nigeria would likely enhance when the country links economic investments with public relations to make the investments more visible through effective media representation.Related ArticlesAyhan, Kadir Jun, and Nancy Snow. 2021. “Introduction to the Special Issue—Global Korea Scholarship: Empirical Evaluation of a Non‐Western Scholarship Program from a Public Diplomacy Perspective.” Politics & Policy 49(6): 1282–91. https://doi.org/10.1111/polp.12440.Hodzi, Obert, and John H. S. Åberg. 2020. “Introduction to the Special Issue: Strategic Deployment of the China Model in Africa.” Politics & Policy 48(5): 804–14. https://doi.org/10.1111/polp.12378.Huijgh, Ellen. 2017. “Indonesia's ‘Intermestic’ Public Diplomacy: Features and Future.” Politics & Policy 45(5): 762–92. https://doi.org/10.1111/polp.12221.

The impact of oil and global markets on Saudi stock market predictability: A machine learning approach

This study investigates the predictability power of oil prices and six international stock markets namely, China, France, UK, Germany, Japan, and the USA, on the Saudi stock market using five Machine Learning (ML) techniques and the Generalized Method of Moments (GMM). Our analysis reveals that prior to the 2006 collapse, oil exerted the least influence on the Saudi market, while the UK and Japan were the most influential stock markets. However, after the collapse, oil became the most influential factor, highlighting the strong dependence of Saudi Arabia's economic structure on oil production. This finding is particularly noteworthy given Saudi Arabia's efforts to reduce its reliance on oil through Vision 2030. We further demonstrate that China's influence on the Saudi market increased significantly after the 2006 collapse, surpassing that of the UK. This is attributable to the substantial trade between China, Japan, and Saudi Arabia, as well as the rise in Saudi foreign direct investment in China, and the decline in such investment in the UK post-collapse. Our results carry important implications for stock market investors and policymakers alike. We suggest that policymakers in Saudi Arabia should continue to diversify their economy away from oil and strengthen economic ties with emerging markets, particularly China, to reduce their vulnerability to oil price fluctuations and ensure sustainable economic growth.

数字经济对我国外商直接投资的影响研究

数字经济对我国外商直接投资的影响研究

The Impact of China's Foreign Direct Investment on the GDP of Belt and Road Initiative Countries

The Impact of China's Foreign Direct Investment on the GDP of Belt and Road Initiative Countries

Can Human Capital Drive Sustainable International Trade? Evidence from BRICS Countries

This paper examines the causal relationship between human capital and economic factors in BRICS countries using a panel vector autoregressive model and data from 1997 to 2020. The economic factors considered include foreign direct investment (FDI), imports, exports, and gross domestic product (GDP). The study conducts a comparative analysis of Brazil, India, China, Russia, and South Africa by adopting a vector autoregressive (VAR) model. The findings indicate a bidirectional causality between human capital and FDI in China, while a unidirectional causality from FDI to human capital is observed in Brazil. Moreover, a unidirectional causality exists from human capital to GDP in Brazil, Russia, India, and South Africa. Additionally, a unidirectional causality is found from human capital to imports and exports in South Africa. Overall, the results suggest the pivotal role of human capital in achieving sustainable economic development in BRICS countries. Policymakers should ensure sustained investment in human capital, focusing on economic growth, FDI, and international trade.

Influence of political risk environment in neighboring countries on FDI in host countries: the moderating role of green governance in neighboring countries.

This study examines whether political risks in neighboring countries affect foreign direct investment (FDI) by Chinese firms in host countries. Grounded in the perspective of new economic geography, it employs panel data comprising China's FDI across 37 countries along the Belt and Road, spanning from 2003 to 2021. It expands conventional research, which typically focuses on the two-country model, to include a broader examination involving third countries. Utilizing the spatial Durbin model, this study reveals that China's FDI in countries along the Belt and Road is affected by the host country's political risk environment and the spatial spillover effect of political risks from neighboring countries. Green governance practices in neighboring countries regulate this relationship. The results demonstrate that China's FDI in countries along the Belt and Road reveals a risk-averse tendency, with a preference for investing in countries characterized by relatively low overall political risk. After taking spatial factors into consideration, the spatial spillover effect of political risks is significant, as political risk levels in neighboring countries stimulate FDI from Chinese enterprises in the host country. As an effective way to mitigate ecological and environmental risks, green governance also shows significant spillover effects. By strengthening green governance, that can weaken the stimulating effect of political risks from neighboring countries on FDI inflow to host countries. Consequently, investors perceive fewer political risks in neighboring countries and are inclined to invest in those with higher levels of green governance. These research findings provide insights into Chinese investors to assess and mitigate political risks in countries along the "Belt and Road."

Research on Employment Effect of FDI in Service Industry in Jiangsu Province

 In recent years, the global foreign direct investment (FDI) has shown a “service-oriented” trend, and the labor force has gradually begun to flow to the service industry. Introducing FDI into service industry can not only absorb part of employment with its job-creation effect, but also promote the improvement of employment quality. Under the guidance of market demand and the government, the proportion of FDI in China's service sector has gradually increased, and the service sector and service trade have become a new driving force for China's economic growth. The development of service industry in Jiangsu province has always been in a leading position in China. Meanwhile, Jiangsu province is also one of the main provinces where labor force gathers. Therefore, it is of theoretical and practical significance to study the employment effect of FDI in service industry in Jiangsu Province for relieving employment pressure and promoting the efficient use of FDI. This study firstly combs the relevant literature at home and abroad, which is divided into two aspects of employment quantity and employment quality. On this basis, the paper analyzes the mechanism of service FDI's influence on employment from these two levels and constructs the theoretical basis of this study. Secondly, this study analyzes the current situation of FDI and employment in service industry in Jiangsu Province. Then, empirical analysis is made on the data of Jiangsu province from 2007 to 2020, and the conclusion is drawn that FDI in service industry in Jiangsu Province can not only promote the increase of employment quantity in service industry, but also promote the improvement of employment quality in service industry. Based on the above analysis, this study puts forward relevant suggestions on how to make more efficient use of FDI to drive employment effect in Jiangsu province.

The Economic Impact of FDI in the Case of China

Since the reform and opening, Foreign Direct Investment (FDI) is crucial to Chinas economic development and has greatly improved Chinas economy. China has also made great achievements in the field of import and export trade. However, foreign direct investment has also brought some negative effects. Therefore, this paper will comprehensively analyze the economic impact of FDI in China. This paper will directly support our views through data and charts, and deeply research the trends and characteristics of FDI. This paper also discusses the determining factors of foreign direct investment through case analysis. This paper deeply analyzed the positive and negative effects of FDI. Through our research, it found and gave some effective suggestions and methods for the negative effects.

Effect on high-quality economic development of foreign direct investment in China from the triple perspectives of financial development

High-quality economic development focuses on achieving effective qualitative improvement and reasonable quantitative growth in the economy, which is the essential way for China to achieve sustainable development. This paper aims to investigate the role of financial development in the impact of foreign direct investment on high-quality economic development. GDP and green total factor productivity are used to measure the quantity and quality of economic development, respectively. We construct benchmark panel regression models, nonlinear interaction term models, and panel threshold models to examine the threshold effect of FDI on high-quality economic development based on the scale, structure, and efficiency of financial development. A series of tests are conducted to check the robustness of the estimates. Our results show that green total factor productivity in China is primarily driven by green technology progress. Additionally, foreign direct investment has a positive impact on China's high-quality economic development, with a threshold effect and nonlinear characteristics. Specifically, the scale of financial development affects the influence of foreign direct investment on the quantity of economic development, while the efficiency of financial development affects its influence on the quality of economic development. Furthermore, the structure of financial development affects both the quantity and quality of economic development. This study presents novel findings that contribute to understanding the role of financial development in the impact of foreign direct investment on high-quality economic development. Likewise, our research has implications for achieving high-quality development. The introduction of foreign direct investment under the high-quality development of the economy should comprehensively consider financial development.

Empirical Analysis of Export Tax Rebate on Inwards Foreign Direct Investment in China

Export tax rebate (ETR) and inwards foreign direct investment (IFDI) are important driving forces for the steady development of China’s export-oriented economy. Based on data from 2004 to 2019, this study puts forward relevant assumptions on constructing a model for empirically analyzing the impact of the ETR on China’s IFDI from the perspective of the national and the sub-national. The result demonstrates that there exists a complementary relationship between the ETR and IFDI; the weak lag effect of ETR on IFDI in the eastern, middle, and western regions of China; an explicit impact on the performance in the western region, which lags behind only one period; and no significant lag effect of ETR on IFDI in developed, moderately developed, and underdeveloped regions. On the basis of this evaluation, the conclusion could be achieved that that ETR has a significant effect on IFDI, though there may be differences in the direction and value of the impact. The highlight of this research is to detect the impact of ETR on IFDI by taking China as a case, and achieved that there exist sub-national differences, including the geographical and development-level differences.

Determinants of Foreign Direct Investment from China to Indonesia

This study identifies and analyzes the determinants influencing China's foreign direct investment level in Indonesia. The independent variables in this study are economic growth, inflation rate, wage rate, exchange rate, and export value. The data used is time series data from 2000 - 2016. The analytical method used is multiple linear regression. The study results show that wage and inflation rates significantly affect the foreign investment level from China to Indonesia. The variables of economic growth, exchange rates, and exports do not affect the level of foreign investment from China to Indonesia. The simultaneous test results significantly influence all the independent variables used in this study. The implication for foreign direct investment is that the government must increase foreign investment in Indonesia to increase economic growth by improving the investment climate in the country by providing several facilities to assist foreign investors so that investors feel safe investing their capital in Indonesia and with synergy with monetary policy in lowering interest rates to increase investor interest in investing.

중국과 주변 접경국 간 경제 관계를 통해 본 북·중 경제 관계 평가

This study poses the research question, “How would North Korea-China economic relations, which have traditionally been evaluated from a bilateral perspective, be different if they were evaluated from a multilateral standpoint with one of China’s bordering countries?”. Based on analysing of economic relations, including foreign trade between China and its 14 bordering countries and foreign direct investment in China’s 13 bordering countries, this study examines North Korea-China economic relations from a multilateral viewpoint. In conclusion, North Korea-China economic relations are seen to be based on the homogeneity of “socialism” and the strategic management of North Korea risks for China’s “core interests” and North Korea’s strategic interests of regime stability and economic development. Compared to the economic relations between China and its other bordering countries, the analysis does not reveal any differentiating factors that make the DPRK-China economic relationship a unique economic relationship based on the traditional bilateral relations of blood ties and nepotism. Rather, China has reaffirmed that it prioritizes its core interests in expanding economic ties with its bordering countries.
 Under President Xi Jinping’s third term, China’s internal and external projects, including the Belt and Road Initiative, a comprehensive version of the country’s open door policy, have gained more momentum under the umbrella of great nation building. Economic relations between China and its neighboring countries have entered the “do-or-die” phase. However, North Korea-China economic relations are still at the stage of dawangyanghui (韜光養晦) and are likely to continue their quiet cooperation for the future. China’s embracing of North Korea, despite the current international political and the economic situation can be interpreted as a management decision to minimize risks to its core interests based on socialist homogeneity.
 In response to the changing international political and economic environment, China has moved away from the traditional blood brotherhood and hammer-and-sickle relationship with North Korea to develop a new, forward-looking relationship with the DPRK that is in line with the current international order. Therefore, it is necessary to objectively and comprehensively evaluate the economic relationship between North Korea and China from the perspective of a multilateral relationship as one of the bordering countries facing China, rather than the traditional, unique relationship.

Greening African economy: The role of Chinese investment and trade

AbstractGlobal warming and the rapid depletion of natural assets have made many countries anxious to find green growth strategies, including global partnerships and international business. China has positioned itself as the right partner for sustainable growth and development in Africa through different engagement routes. In this study, we employ fixed effects on a sample of 27 countries over 17 years to examine the impact of China's foreign direct investment and trade on green growth in Africa. Our results show that China's investment and trade affect green growth differently. We find that foreign direct investment and export have a negative impact on green growth. Contrarily, we find importation from China to increase green growth. Our results suggest that the growing presence of China in Africa through direct investment and exportation of natural resources is likely to hamper achieving the Sustainable Development Growth goals. However, countries can harness some benefits from importing sustainable products from China. Our study extends the green growth literature and informs policymakers of the need to pay attention to the effects of growing Chinese‐Africa engagement on attaining sustainable and greener growth. The results are robust to different identification techniques, including two‐stage least square and system generalised method of movement.

Beyond as bridges: The role of the Chinese voluntary associations in Chinese outward foreign direct investment in Southeast Asia

With the implementation of the ‘Go Global’ strategy and the Belt and Road Initiative, Chinese enterprises have gradually grown into the main force of outward foreign direct investment (OFDI) around the world. Overseas and domestic Chinese voluntary associations (CVAs) have actively promoted inward foreign direct investment in China, while their role in helping Chinese enterprises invest abroad has not been fully revealed. To address this lacuna, we explore the role of CVAs in the foreign direct investment of Chinese enterprises in Southeast Asia and the heterogeneity of their roles based on different types of associations. Our main argument is that CVAs play an intermediary role in shaping Chinese OFDI by facilitating bilateral information exchange and resource matching to enable enterprises' global–local interactions. This research contributes to verifying the impact of CVAs on Chinese enterprises' OFDI and providing implications for both host countries to attract investment and multinational enterprises from China and other developing countries to achieve internationalisation.

Asymmetric role of natural resources dependence, industrialization, and foreign direct investment in China’s economic growth

China’s industrial sector is performing continuously in economic activity, aiding its share in the economy's progression. This study aims to analyze the asymmetric positive-negative shocks' influence of industrial value-added, foreign direct investment, technological innovation and natural resources on China's economic growth. We take the data of the concerned indicators from 1986 to 2019 and apply N-ARDL on the model for empirical short and long-run asymmetric estimation. The findings illustrate the positive effect of industrial value-added on economic growth during positive shock and adverse during negative shock. Similarly, technological innovation is affirmative in the acquisition of economic growth in both conditions of positive-negative shock. In contrast, foreign direct investment and natural resource rents have no growth implication during positive shock, while adversative during negative shock in the short and long run. The error correction term has stabilized the error that arises from the short to the long run. At the same time, asymmetric multiplier plots demonstrate a new equilibrium equation of asymmetric adaptations of economic growth after the positive-negative shocks. In the end, result-based suggestions recommend government and policymakers' attention toward heavy and secondary industries, technology-intensive policies, and adaptation of sustainable resources.

Dynamic discrete choice models with incomplete data: Sharp identification

In many empirical studies, those states that are relevant for forward-looking 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 declining/booming 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 future states. 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.

The impact of China's trade and FDI on Africa's GVC participation and economic upgrading

PurposeThis study examines the impact of China's trade and foreign direct investment (FDI) on Africa's global value chain (GVC) participation and economic upgrading.Design/methodology/approachThe study covered 48 African countries, cutting across the western, eastern, central, southern and northern subregions to cover the heterogeneity of the continent. The study adopted feasible generalized least squares panel VAR-Granger causality Wald test and system generalized methods of moments techniques for estimation.FindingsOverall, China's FDI to Africa and US-Africa trade have a linear relationship with Africa's GVC involvement and economic upgrading. The findings suggest that although China-Africa trade has a positive impact on GVC engagement and upgrading, the marginal effect decreases in the face of US-Africa and EU-Africa trade.Originality/valueThis study provides new evidence on the impact of China's FDI and trade on African economies' GVC participation and economic upgrading. To the best of the authors’ knowledge, this is the first study to empirically explore the effects of China's FDI and trade on Africa's GVC integration and economic upgrading as well as from the perspectives of backward and forward GVC participation. Furthermore, the study empirically examines whether the effects of Africa's economic cooperation with China relative to its GVC engagement differ from those of Europe (EU) and the US via a comparative regression.

Co-coupling Analysis of China's OFDI and Digital Economy Development in Belt and Road Countries

To explore China's OFDI and that of other regions in the collaborative development of digital economy under the construction of the Belt and Road, while studying the synergistic effect between China's OFDI and areas along the national digital economy coordination effect, based on the application of the entropy method (TOPSIS) method of coordination degree model, to build the development coordination degree evaluation model of China's foreign direct investment and national digital economy where areas are gradually developing along the Belt and Road, the model is applied to 38 countries and regions. The research proves that the coupling degree of this composite system between the two subsystems increases year by year, and is gradually close to 1. Research is helpful to test through the digital way to reduce risk and expanding the scope of the earnings of China's foreign direct investment and areas there specific effects between digital economy, new era in order to promote China's OFDI and area development of national digital economy all the way, can provide the new train of thought and the Chinese high quality investment ideas.

How does home and host-country policy uncertainty affect outward FDI? Firm-level evidence from China.

How the foreign direct investment behavior of enterprises changes in response to the risks and instability of government economic policy changes is a relevant issue which, however, has not been extensively studied yet. Accordingly, this paper establishes a linear probability regression model to study the foreign direct investment behavior of Chinese A-share listed companies in 13 countries between 2003 and 2020 and explores whether multinational companies change their OFDI decisions when the economic policy environment of China and trade-related countries are unstable. A firm heterogeneity analysis and phased discussions were conducted, and a robust conclusion was finally drawn. The results show that (1) China's economic policy uncertainty promotes China's foreign direct investment, while the host country's monetary policy uncertainty inhibits China's foreign direct investment. (2) The foreign direct investment decisions of enterprises are affected not only by the macroeconomic and policy environment of the two trading countries but also by their development characteristics. (3) Sino-US trade frictions and the financial crisis have different effects on China's foreign direct investment.