Efficiency and factors influencing China’s outward direct investment in ASEAN and the European Union: a comparative analysis

Jingxia Zhang and Akihiro Ogura

Journal of Chinese Economic and Business Studies, 2025, vol. 23, issue 1, 87-122

Abstract: This research examines China’s outward direct investment efficiency in ASEAN and the European Union (EU) using a stochastic frontier investment gravity model. We find that China’s investment efficiency in EU15 remained stable from 2003 to 2020, while efficiency in ASEAN and EU13 declined. China benefits from EU15’s advanced manufacturing and management technologies due to its high economic development. However, with an investment efficiency of 0.259, there is untapped potential. In ASEAN, factors like higher economic freedom positively impact China’s investment efficiency, and infrastructure opportunities negatively impact China’s investment efficiency. Economic distance positively affects China’s investment in EU countries, especially in EU15. But higher economic freedom intensifies global competition, limiting China’s direct investment, particularly in EU13. The EU’s infrastructure and updated investment agreements facilitate China’s investment, while the ‘Belt and Road’ initiative has limited impact.

Date: 2025
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DOI: 10.1080/14765284.2024.2334557

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