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Factors Influencing China’s Outward Foreign Direct Investment

Hsiu-Ling Wu, Chien-Hsun Chen () and Yi-Rou Chen
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Hsiu-Ling Wu: Hsiu-Ling Wu, Department of Economics, Soochow University, Taipei, Taiwan; e-mail:
Yi-Rou Chen: Yi-Rou Chen, Graduate Institute of International Economics, National Chung-Cheng University, Chiayi County, Taiwan.

Margin: The Journal of Applied Economic Research, 2021, vol. 15, issue 3, 299-319

Abstract: The main purpose of this study is to explore factors determining China’s outward FDI (OFDI), with particular emphasis on the unique characteristics of China’s economy during the period of institutional transformation. The empirical results obtained in the present study show that Chinese enterprises tend to invest in countries that have a mature economy. Exports have a significantly positive effect on China’s OFDI, with the relationship between OFDI and exports in China being a complementary one. The relationship between imports and OFDI for China is one of substitution, as Chinese enterprises have often relied upon the importation of key components as a means of acquiring the technology they need. Exchange rates, monopolistic advantage, foreign exchange reserves and the level of technology intensity, all have a significant impact on China’s OFDI, while the GDP growth rate and geographical distance have not had a significant impact. JEL Classification: F200, O160, P450

Keywords: China’s outward FDI; Chinese enterprises; Multinational corporations (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1177/09738010211010368

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