Investing Overseas Without Moving Factories Abroad: The Case of Chinese Outward Direct Investment

Yiping Huang and Bijun Wang
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Bijun Wang: China Macroeconomic Research Center, National School of Development, Peking University

Asian Development Review, 2013, vol. 30, issue 1, 85-107

Abstract: Chinese outward direct investment (ODI) is unique in the sense that it starts in the early stage of economic development and does not move factories overseas. Empirical analyses using firm-level data confirm that the main purpose of Chinese ODI is to strengthen domestic production and productivity by acquiring strategic assets overseas. This Chinese style of ODI, which is different from Japanese efficiency-seeking ODI or American market-seeking ODI, is mainly underscored by significant cost advantage and abundant foreign exchange. We suggest that there might be a life cycle of ODI, which evolves from the Chinese style to the Japanese style and then to the American style as the economy develops. Following this proposition, we expect a major wave of ODI by Chinese small-sized and medium-sized manufacturing enterprises in the coming decade. © 2013 Asian Development Bank and Asian Development Bank Institute.

Keywords: Chinese outward direct investment; Chinese style ODI; ODI life-cycle (search for similar items in EconPapers)
JEL-codes: E22 F21 F23 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (14)

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