China’s Regulatory Framework for Outward Foreign Direct Investment

Karl P. Sauvant and Victor Zitian Chen
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Karl P. Sauvant: Columbia University and University of North Carolina

EABER Working Papers from East Asian Bureau of Economic Research

Abstract: China has become the world’s third largest outward investor, behind the United States and Japan. A growing body of literature suggests that China’s regulatory framework for outward foreign direct investment (OFDI) is a determinant of the country’s rising OFDI. This paper presents a holistic review of that framework, including some possibilities for its improvement. Overall, China’s framework serves two objectives : to help Chinese firms become more competitive internationally and to assist the country in its development effort. In pursuing these objectives, the regulatory framework has moved from restricting, to facilitating, to supporting, to encouraging OFDI; but there are still strong elements of administrative control that make it cumbersome. State-owned enterprises (SOEs) seem to benefit particularly from the current framework when internationalizing through FDI.

Keywords: China; Outward foreign direct investment; OFDI; formal institutions; government (search for similar items in EconPapers)
JEL-codes: F21 F23 F31 F65 G18 G28 G38 H1 H2 H3 K2 K3 M16 P33 (search for similar items in EconPapers)
Date: 2013-11
New Economics Papers: this item is included in nep-int and nep-tra
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