Overseas Investment Research Articles

The Business Practices of a Chinese State-Owned Enterprise in Myanmar’s Kyaukphyu Special Economic Zone: Perspectives of Local Non-State Stakeholders

The Kyaukphyu Special Economic Zone (KSEZ) in Myanmar is part of China’s massive international development strategy known as the Belt and Road Initiative (BRI). To advance the KSEZ, the Chinese state-owned enterprise (SOE) China International Trust and Investment Corporation (CITIC) has asserted its commitment to the principles of corporate social responsibility (CSR). In this paper, we investigate how CITIC’s CSR practices are perceived by two groups of local non-state stakeholders: Myanmar villagers and civil society organizations (CSOs). To this end, we conducted 31 qualitative interviews with non-state stakeholders in Kyaukphyu Township between March 2022 and October 2023. According to our interview results, there is a substantial though not universal local perception that CITIC’s publicly broadcast commitment to CSR has served primarily to advance the KSEZ and left the concerns of local residents largely unaddressed. By examining CITIC’s stated commitment and its actual commitment to CSR as perceived by the local non-state stakeholders, we aim in this study to deepen our understanding of the business practices of Chinese SOEs in overseas investments and to enrich the research on the BRI in Myanmar.

Navigating investment risks mode and transmission: a study of China’s participation in the Belt and Road Initiative through the lens of risk society

ABSTRACT The world is experiencing a period of heightened complexity and uncertainty, where risks are interconnected and extend beyond traditional boundaries. This paper delves into the effective identification of investment risks for China’s involvement in the Belt and Road Initiative (BRI), utilizing methodologies rooted in complex networks and Minimum Spanning Tree. It establishes an indicator system for foreign direct investment (FDI) risks across four dimensions: economic, political, social, and bilateral relations, while also developing a risk identification model grounded in complex network theory. The empirical analysis draws from data spanning 2010 to 2019, encompassing 103 co-building countries of the BRI. Key findings include: (1) Political risk emerges as pivotal when Chinese enterprises invest in co-building countries of the BRI. (2) Examining individual country investment risks reveals an increased transmissibility of China’s FDI risks. Notably, Indonesia, Brazil, and Bangladesh showcase internally complex investment risk environments. (3) Analysis of investment risks between countries and regions indicates a rise in risk transmission paths since 2010. Particularly, the South Asian region stands out for harbouring the longest transmission path. This study advances theoretical and empirical understanding of effective identification of China’s overseas investment risks, offering valuable insights for the development of global risk society governance.

Chinese Firms in the US–China Trade War: Decoupling through Reshoring?

Abstract This paper leverages firm-level data to examine the impact of the US–China trade war on the greenfield investment of Chinese investors. Our research yields a few interesting findings. Importantly, our longitudinal analysis of Chinese greenfield investment projects yields evidence that the tariffs have dampened overall Chinese investment. Further analyses for different world regions indicate that while the tariffs have generally had a chilling effect on Chinese investment in most world regions, they may have prompted Chinese investors to engage in “tariff-jumping” in the United States. Our analysis further shows that the trade war may have incentivized Chinese investors to increasingly invest in countries with good political ties with Beijing, presumably as a buffer against potential downturns in bilateral relations. It may also have contributed, at least in part, to a reduced willingness by Chinese state-owned enterprises to engage in overseas investment. However, we found no evidence that the tariffs have led to a perceptible shift in China's investment flows toward BRI countries. Overall, these findings help to illuminate the extent to which policies of “decoupling” may have induced shifts in Chinese investors’ investment patterns, at least in the short-run.

Trade Globalization, Overseas Investment, and Tax Revenue Growth in Sub-Saharan Africa

Abstract The financial setbacks of the sub-Saharan African regions have necessitated this study. The study assesses the role of trade openness and foreign direct investment (FDI) in driving tax revenue growth in sub-Saharan Africa. The major parameter representing the dependent variable is tax revenue growth while the independent factors include trade openness, exports, imports, and GDP as a moderating element. The research runs from 1990 to 2022 and employs the vector error correction model (VECM), with a unit root test that yields order one, while the Johansen co-integration test shows a long-run connection for all variables. The VECM results suggest that the long-run disequilibrium is corrected at a positive rate of 8.5%. It is also noteworthy that a percentage change in trade openness would result in a 13.7% decrease in tax income, but fluctuations in all other parameters except GDP will enhance tax revenue growth in sub-Saharan Africa. The test for the impact of all criteria on tax revenue growth yields minor results; however, tax revenue growth initiatives in Sub-Saharan Africa have a negative short- term effect on FDI but a favourable long-term impact. In addition, trade openness has a negative effect on GDP and exports in the short run, while imports have a negative impact on foreign investment. The policy implications include that bilateral trade policies will need to be reviewed, with an emphasis on exports, economic growth, and tax collection schemes. In addition, the governments in sub-Saharan African regions are encouraged to enact tax policies that would engender the inflow of overseas investment.

Flexible sovereignty and contested legality: The overseas employment and legal struggles of Chinese workers

The surge in Chinese overseas investments has increased the transnational movement of Chinese workers. While much literature explores the interactions between Chinese managers and local workers in host countries, the dynamics between Chinese employers and Chinese workers abroad remain under-examined. This paper employs the conceptual frameworks of flexible sovereignty and contested legality to examine the distinctive norms and practices in labor recruitment, management, and dispute resolution emerged through overseas employment. Through a critical review of lawsuits between returned Chinese workers and their Chinese employers in Chinese courts – originating from the top five African countries receiving Chinese labor (Algeria, Angola, Nigeria, Ethiopia, and Equatorial Guinea) – the analysis reveals new spatialities and temporalities of sovereign control exerted by globalized Chinese companies over overseas workplaces and migrant workers. Overseas employment marks a complex process of coupling and decoupling among various forms of Chinese capital and labor. Three mechanisms of corporate sovereign control are identified: the delineation of workplaces and workers' bodies as spaces of exception, the flexibilization of working hours and job tenure, and the politics of delays in wage disbursement and dispute resolution. These mechanisms provoke contentious debates during court proceedings and result in uneven judicial outcomes for Chinese workers.

The Impact of China’s High-speed Rail Overseas Investment on Economic Growth of the Belt and Road Countries

Formally proposed in 2009, China's high-speed rail ‘go global’ was effectively promoted in 2013 with the proposal of the Belt and Road Initiative (BRI), which expanded China's high-speed rail overseas investment to a global scale. Studying the impact of China's high-speed rail (HSR) investment overseas is of great significance for the continuous promotion of BRI. Based on the panel data of 46 countries along the Belt and Road from 2006 to 2021, the difference-in-difference method (DID) is used to evaluate the impact of China's HSR overseas investment on the economic growth of corresponding countries. Besides, heterogeneity analysis in terms of region is carried out in this paper. The empirical results show that, first, China's overseas investment in HSR promotes the economic growth of the countries along the Belt and Road, and this conclusion is confirmed by the parallel trend test. Second, compared with other regions, China's HSR investment has a more obvious positive effect on the economic growth of Asian countries.

Effect of External Debt On the Financial Performance of Commercial Banks in Kenya (2008-2022)

This study analyses the impact of external debt on the financial performance of commercial banks in Kenya for the period 2008-2022. Employing descriptive, correlational, and inferential research designs, the study reviewed data from the Central Bank of Kenya, the World Bank, KNBS, and IMF on a quarterly basis. By employing the Augmented Dickey-Fuller test, ROE and external debt were further qualified to be stationary at first difference. The results highlighted by the Autoregressive Distributed Lag (ARDL) analysis indicated a statistically significant negative relationship between external debt and financial performance; the coefficients (-0.8998) confirmed that for every unit of increase in external debt, there would be a decline in ROE by 0.8998 units. The study establishes that external debt has been detrimental to the financial health of Kenyan banks due to the economic pressure it brings to the sector. For this purpose, it suggests that the government should avoid borrowing from external sources, and it has advised the development of measures that encourage overseas investors to invest in the country's banking sector. The policy of attracting FDI can enhance capital availability and alleviate the financial load on banking institutions. Relaxing regulations that restrict foreign investors would pave the way for this and help increase the bank’s performance, thus enhancing long-term economic growth.

Adaptive Strategies and Sustainable Innovations of Chinese Contractors in the Belt and Road Initiative: A Social Network and Supply Chain Integration Perspective

As global economic integration and rapid technological advancements transform international business, international engineering contracting has become essential for achieving sustainable development goals (SDGs). This paper investigates the significant impact of China’s strategic initiatives, notably the “Going Global” strategy and the Belt and Road Initiative (BRI), on the operational practices of Chinese enterprises involved in overseas investments. Central to this transformation is the Engineering, Procurement, and Construction (EPC) model, which emphasizes the integration of supply chain management and stakeholder collaboration to enhance performance in international EPC projects and underscores the crucial role of these elements in promoting sustainability. Incorporating insights from social network data analysis, this study reveals that contractors collaborating with various stakeholders—such as owners/consulting engineers, domestic and foreign customs departments, and group headquarters/design parties—exhibit a high degree of similarity in personnel profiles. This suggests that the internal organizational structure and personnel allocation of contractors could be optimized to enhance operational efficiency, aligning with the collaborative patterns identified. This study addresses a critical research gap by exploring how effective supply chain management and collaborative stakeholder engagement within multinational EPC projects contribute to sustainable outcomes. Employing advanced social network analysis software, the research examines the complex interactions among stakeholders and their influence on procurement dynamics. Findings indicate that strong relational networks and strategic collaborations significantly enhance procurement efficiency and project success, underscoring the importance of supply chain integration. Ultimately, integrating supply chain management principles into the EPC model not only offers innovative perspectives for advancing sustainability in international projects but also provides actionable insights for improving project outcomes within the BRI framework. This research underscores the pivotal role of supply chain organization and stakeholder cooperation in achieving sustainability objectives, thereby enriching the discourse on sustainable enterprise operation and supply chain management in the context of global initiatives.

Does distance from government hinder enterprises’ OFDI？Evidence from China

This study analyzes the impact of government–enterprise distance on the probability of outward foreign direct investment (OFDI) with matched data from Chinese prefecture-level municipal governments, the Chinese industrial enterprises database, and the directory of overseas investment enterprises. We determine that increased distance between the government and enterprises has a significant negative impact on the probability of enterprises’ OFDI. Mechanism analysis demonstrates that increased government–enterprise distance, which causes higher information search and relationship building costs, and decreased accessibility of public service, are the main reasons for this decline.

Green Facades

Abstract This article examines the development of ‘Forest City’ in the Iskandar Malaysia development Corridor within the broader context of China’s international expansion, focusing on Forest City portrayal as a model of sustainability. Despite being promoted as ‘eco-cities’ and ‘green cities’, these mega-projects often fall short of these ideals, revealing a significant gap between their marketed image and their actual environmental practices (Ouis 2011). Through the lens of Practice Theory enriched by the developmental state model, this study analyses the alignment between the promotional rhetoric of Chinese-backed green city projects and their real-world execution. Practice Theory offers a valuable tool for identifying inconsistencies between stated commitments to sustainability and the tangible outcomes observed in Chinese-finance development projects in Southeast Asia. The developmental state model helps to understand the practices that are translated, transplanted, and embedded by Chinese developers across borders. This analytical framework is critical as it sheds light on the underlying dynamics of ‘global China’ initiatives, which have gained increased global attention. Such scrutiny is particularly pertinent in highlighting the contrast between the marketed sustainability of these cities and the principles of genuine sustainable development. This critique provides a deeper understanding of the environmental implications of China’s overseas investments. Based on this analysis, the overarching research question is: why do Chinese-backed green city projects, such as Forest City in Iskandar Malaysia, frequently exhibit discrepancies between their promoted environmental sustainability and the actual environmental outcomes?

Expansion or retrenchment: Corporate investment reactions to external security risks

Intensifying power competition has raised the need to understand how corporations react to international security dynamic challenges. Using data on Chinese A-share listed companies from 2012 to 2022, we developed an index to measure external security risk and empirically study the influence of external security risks on corporate investment behavior. These findings indicate that corporations reduce real investment and increase financial asset allocation when external security risk is high. Meanwhile, corporations tend to expand overseas investments to enhance international diversification and turn toward low-risk regions. The technology and strategic emerging sectors exhibit a higher preference for real investment during periods of high external security risk. Furthermore, entrepreneurs’ family-nation sentiment can inhibit corporate financial investment and promote real investment. This study contributes to understanding how the external security environment shapes corporate investment strategies. It also demonstrates how entrepreneurial spirit can influence corporate investment decisions during periods of high security risk.

Local government debt and firm’s outward foreign direct investment

PurposeThe purpose of this study is to provide evidence that government financing behavior has an impact on the outward foreign direct investment (OFDI) of enterprises.Design/methodology/approachThis paper uses debt data from local government financing vehicles to measure the local government debt in China. Based on the data of listed manufacturing firms in China from 2010 to 2018, this paper uses the Tobit model to verify the impact of local government debt and firms' OFDI.FindingsThe results indicate that local government debt impedes firms' OFDI, with a more pronounced impact on state-owned enterprises (SOEs) and those with higher political connections. Furthermore, our study suggests that the dampening effect of local governments on firms' OFDI is mitigated in regions following the implementation of the Local Government Debt Management Act.Originality/valueThis study verifies the negative impact of local government debt activity on firms' overseas investments. This is not due to debt crowding out, but rather to the fact that local governments prefer to keep resources locally to stimulate the economy. This paper offers novel insights into the theoretical mechanisms by which local government behavior influences firms' investment activities in emerging markets.

Corporate financialization and overseas investment efficiency: Evidence from China

This study examines the relationship between corporate financialization and outbound investment effectiveness based on empirical data from Chinese companies listed on the Shanghai and Shenzhen Stock Exchanges from 2010 to 2022. The study finds that corporate financialization greatly improves investment efficiency by alleviating financial constraints and reducing operating costs. The study provides insight into the implications of financialization for firms’ investment efficiency in foreign markets and generates significant guidance for practitioners.

Do multinational enterprises’ overseas investment activities promote their green transition performance? Evidence from Chinese listed companies

Enterprises, including multinational ones, play a crucial role in harmonizing economic growth with environmental conservation through green transition efforts. Based on a panel dataset of 1,916 publicly listed Chinese companies, this study investigates how overseas investment activities conducted by multinational enterprises (MNEs) influence their green transition performance. We find that the increase in overseas investment significantly contributes to MNEs’ transition toward greener practices, with this positive effect being particularly pronounced in greenfield investments. Mechanism analysis suggests that overseas investment benefits the green transition performance of MNEs through competitive effects, economies of scale, and profit feedback from overseas subsidiaries. Moreover, reverse technology spillovers derived from overseas investments are effective in promoting MNEs’ greening, an effect amplified when MNEs possess a higher technology absorptive capacity or operate in flexible intellectual property protection.

Economic policy uncertainty and Chinese companies' overseas investment

Overseas investment by Chinese enterprises is one of the critical trends in China's economic development in recent years, and more and more Chinese enterprises have begun to look at overseas markets to seek broader development space and resources. The study chooses publicly traded firms on the Shanghai and Shenzhen stock exchanges from 2011 to 2022 as its primary investigation pool, and confirms a series of findings:economic policy uncertainty negatively affects enterprises' overseas investment; good bank-enterprise relationship helps to improve Chinese enterprises' overseas investment. A good bank-enterprise relationship can help enterprises obtain financial support better, thus expanding overseas investment; government subsidies can drive Chinese enterprises to increase overseas investment. Government subsidies can mitigate the risk of Chinese enterprises' overseas investment to a certain extent, thus promoting the increase of Chinese enterprises' overseas investment; the impact of policy uncertainty on non-state-owned enterprises' overseas investment is more significant than that of state-owned enterprises.

Research on Environmental Legal Risks in Foreign Investment of Chinese Transnational Corporations

Since the development of the trend of economic globalization, the number of China's overseas investment projects has risen sharply, but at the same time, the potential environmental problems and risks in the investment process have become evident. This essay discusses the environmental legal risks faced by Chinese transnational enterprises in the process of outbound investment and analyzes the specific impact of host country environmental regulation risk and multilateral treaty environmental regulation risk. As global environmental problems become increasingly serious, the investment activities of transnational corporations (TNCs) may be harmful to the local environment while promoting local economic development. This essay summarizes the current status of research on environmental legal in Chinese and international academia, emphasizes that home countries should take responsibility for environmental protection in their investment places when promoting overseas investment. This essay proposes a strategy covering three dimensions--international level, home country and TNCs, in order to promote the sustainable development of TNCss overseas investment.

Host country economic policy uncertainty, trade openness and Chinese enterprise overseas investment

This study mainly analyzes the link between host country economic policy uncertainty (HEPU) and Chinese enterprises' outward foreign direct investment (OFDI) and finds that HEPU negatively influences Chinese enterprises' OFDI. The increase of HEPU will inhibit market-oriented and technology-oriented OFDI, while resource-endowed OFDI is insignificant. In addition, where trade openness plays a mediating role and the results of the heterogeneity analysis show that the economic policy uncertainty of developed countries has a more significant influence on Chinese enterprises' OFDI. In contrast, the economic policy uncertainty of developing countries has a relatively minor influence on Chinese enterprises' OFDI. This paper provides a reference for Chinese enterprises' OFDI, as well as suggestions for the state and government to formulate economic policies, so that Chinese enterprises can maintain competitiveness and realize sustainable development in the ever-changing global economic environment.

The Economic Policy Uncertainty on Firms Behavior

The study examines how economic policy uncertainty could affect firm behavior. It discusses how changes in economic policies can affect investment decisions, capital expenditure, innovation, and green behavior of firms. This topic focuses on analyzing the relationship between corporate financial decisions and consumer spending under policy uncertainty. It also explores the relationship between policy uncertainty and firms' overseas investments, environmental performance, governance practices, tax avoidance strategies, and cash-effective tax rates. The findings reveal the importance of cash holdings in alleviating the effects of policy uncertainty on firm activities and highlight the relationship between policy uncertainty and firms' carbon emission intensity. Overall, the study provides insights into the various aspects of corporate decision-making affected by economic policy uncertainty.

Effect of green industrial policy on China's outward renewable energy investment

The urgent need to accelerate global decarbonization to mitigate against climate change has revitalized the role of industrial policy in a country's economic transformation. This paper focuses on the impact of green industrial policies on China's renewable energy investment overseas. Findings indicate a strong relationship with consistent significant effect across renewable energy sectors, heterogeneous host countries, and firm ownership. Green industrial policies compensate for impoverished investment environments by signaling host governments' commitment to energy transition and decarbonization. This attenuates risk and uncertainty and has a positive effect on renewable energy investment from China. Such investment is especially relevant for developing countries interested in participating in energy transition. China's investment potentially increases access to renewable energy that facilitates global decarbonization.

Research on the Environmental Risks of China's Overseas Investment under the Background of "Belt and Road"

Research on the Environmental Risks of China's Overseas Investment under the Background of "Belt and Road"