Exchange rate appreciation and outward FDI in China

Fan Feng, Fa-qin Lin and Tang-you Wang

The Journal of International Trade & Economic Development, 2022, vol. 31, issue 7, 995-1016

Abstract: This study analysed the impact of appreciation of the renminbi (RMB) on China's outward foreign direct investment (OFDI) on a theoretical and empirical basis. Based on theoretical analysis, we found that the appreciation of RMB can promote OFDI, as it can lower the threshold for foreign direct investment. Then, by constructing export-weighted effective exchange rates, we found that for every 1% appreciation of the RMB, the probability of enterprises engaging in OFDI increased by 0.0069 over 2001–2012.

Date: 2022
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DOI: 10.1080/09638199.2022.2050782

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