Perspectives on China's outward foreign direct investment

Randall Morck, Bernard Yeung and Minyuan Zhao
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Bernard Yeung: [1] 2Stern School of Business, New York University, New York, USA [2] 3Guanghua School of Management, Peking University, Beijing, China
Minyuan Zhao: Ross School of Business, University of Michigan, Ann Arbor, USA

Journal of International Business Studies, 2008, vol. 39, issue 3, 337-350

Abstract: Recent economic data reveal that, at the infant stage, China's outward foreign direct investment (FDI) is biased towards tax havens and Southeast Asian countries and are mostly conducted by state-controlled enterprises with government sanctioned monopoly status. Further examination of China's savings rate, corporate ownership structures, and bank-dominated capital allocation suggests that, although a surge in China's outward FDI might be economically sensible, the most active players have incentives to conduct excessive outward FDI while capital constraints limit players that most likely have value-creating FDI opportunities. We then discuss plausible firm-level justifications for China's outward FDI, its importance, and promising avenues for further research. Journal of International Business Studies (2008) 39, 337–350. doi:10.1057/palgrave.jibs.8400366

Date: 2008
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