Determinants of Chinese Direct Investments in the European Union

Christian Dreger, Yun Schüler-Zhou and Margot Schüller
Authors registered in the RePEc Author Service: Yun Schueler-Zhou ()

No 1480, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: This paper analyses the determinants of Chinese direct investment (DI) in the European Union (EU). Evidence is based on panel Poisson models drawing on two investment monitors for individual projects. We distinguish between the numbers of greenfield investments (GIs) and mergers and acquisitions (M&As). The findings indicate that market size and trade relationships with China are the primary factors driving Chinese DI in the EU. In contrast, more business-friendly institutions do not foster DI. Chinese enterprises might be risk averse, in other words prefer to choose their activities in regions with less competitive markets. The striking difference between GIs and M&As is related to unit labour costs. Higher costs make the host country less attractive for the establishment of new firms, but do not affect the involvement in existing firms. The sectoral dispersion of Chinese DI in the EU has not changed much since the global financial crisis of 2008. Most relevant shifts have occurred in research and development (R&D), where low-income EU countries have gained in attractiveness.

Keywords: China FDI; Greenfield investments; mergers and acquisitions (search for similar items in EconPapers)
JEL-codes: C25 E22 F21 (search for similar items in EconPapers)
Pages: 19 p.
Date: 2015
New Economics Papers: this item is included in nep-cna and nep-eec
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Related works:
Journal Article: Determinants of Chinese direct investments in the European Union (2017)
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