Forty Years Development of China's Outward Foreign Direct Investment: Retrospect and the Challenges Ahead

Asan, Onur; Gao, Kailin

doi:10.1111/cwe.12278

Cited by 30 publications

(17 citation statements)

References 22 publications

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“…Indeed, there is a significant body of existing empirical studies that have been incapable of finding vigorous evidence that productivity improvements can accrue for local firms through intra-industry spillovers [14,24,25,[27][28][29], nor has there been strong evidence of horizontal spillovers. Wang and Gao [30] On the other hand, both developed and developing host countries have demonstrated their concern over national security and the misbehavior of some Chinese overseas companies.…”

Section: Productivity Spillovers From Fdimentioning

confidence: 99%

Does Chinese Inward Foreign Direct Investment Improve the Productivity of Domestic Firms? Horizontal Linkages and Absorptive Capacities: Firm-Level Evidence from Ethiopia

Negash

Zhu

et al. 2020

Sustainability

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Publicized as a global call for action in 2015, the United Nations General Assembly (UNGA) has forwarded an agenda of resolutions to achieve the goals of sustainable development by 2030 (SDGs). Due to the specific challenges of funding gaps and the lack of advanced technology, the majority of Sub-Saharan African (SSA) countries are still behind the standard of world development. Since foreign direct investment (FDI) has the potential to bring much-needed capital and efficient technology, FDI has often been considered as a vigorous source of development, even for sustainable development for under-developing economies experienced today. Conspicuously, Chinese outward FDI (OFDI) into SSA has seen a strong upward trend in the 21st Century, after China proclaimed its "go global" strategy. Ethiopia is one of the favored destinations of the trend of Chinese OFDI, which also substantially continues through the SSA region. The hosting economy of Ethiopia expected that Chinese inward FDI comes with capital, efficient technology, and knowledge to contribute innovations through directly improving productivity and competitiveness via technological diffusion to domestic industries and eventually for sustainable development. Against this backdrop, this study utilizes firm-level panel datasets from Ethiopia to address the following couple of research questions. The first question is: are there any productivity differences between the establishment of Chinese-affiliated and domestic firms in the manufacturing industry in Ethiopia? The second is, does the presence of Chinese-affiliated firms provide productivity spillovers for domestic firms in the same industry level for socio-economic development? The investigation was carried out using 2554 manufacturing firm census data, from which 15.04% were Chinese firms operating in Ethiopia. We used the ordinary least squares (OLS) and generalized-method-of-moments (GMM) two-step approaches for estimations. Our findings revealed that, generally, Chinese firms were more productive than local firms and their presence can bring positive potential productivity spillover effects for domestic firms. Specifically, we found that local firms have gained significant positive spillovers when they had a high absorptive capacity, whereas low-absorptive capacity firms suffered negative spillovers. We also found that non-exporting domestic firms experience significant positive spillovers from the presence of Chinese firms.

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Section: Productivity Spillovers From Fdimentioning

confidence: 99%

Does Chinese Inward Foreign Direct Investment Improve the Productivity of Domestic Firms? Horizontal Linkages and Absorptive Capacities: Firm-Level Evidence from Ethiopia

Negash

Zhu

et al. 2020

Sustainability

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“…This is due to the trade and financial integration (especially OFDI) with SSA countries have been identified among the key and crucial pillars of the BRI economic strategy to improve Chinese external sectors and facilitate the conducive business environment (Huang, 2016;Lu et al, 2018;Li and Zhu, 2019;Ma et al, 2019). Indeed, in the past three decades, Chinese overseas investment has faced three phases of development: from "restricted", (2000-2016) "relaxed", and (2017 onwards) "regulated" (Wang and Gao, 2019). Since its capital account has not yet been fully liberalized, changes have occurred at different periods associated with the policy shifts (Wang and Gao, 2019;Chen et al, 2019).…”

Section: Introductionmentioning

confidence: 99%

“…Indeed, in the past three decades, Chinese overseas investment has faced three phases of development: from "restricted", (2000-2016) "relaxed", and (2017 onwards) "regulated" (Wang and Gao, 2019). Since its capital account has not yet been fully liberalized, changes have occurred at different periods associated with the policy shifts (Wang and Gao, 2019;Chen et al, 2019). Accordingly, Chinese outward investment of USD$1 billion in 1991 was accelerated to USD$196.2 billion in 2016 and the total stock stood USD$1809.04 billion in 2017 in the global arena (MOFCOM, 2017;Shahriar et al, 2019;Wang and Gao, 2019).…”

Section: Introductionmentioning

confidence: 99%

Analysis of the Bri and China’s Ofdi in Sub-Saharan Africa

Wang¹,

Lu²,

Zhang³

et al. 2020

Singapore Econ. Rev.

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The “Belt and Road Initiative” (BRI) has been launched by the Chinese government in 2013. The aim was to stimulate cross-border economic development in massive geographical areas covering Asia, Oceania, Europe, Africa, and Latin America which accounts for 80% and 40% of the world population and gross domestic product (GDP), respectively. The BRI has devised an extension of the “going global” strategy to reconfigure China’s overseas sector in order to extend its spillovers, and create more development opportunities for participating countries. In practice, cross-border infrastructure was a comprehensive role to reduce transportation cost; however, the BRI was vast by nature that includes financial support, policy cooperation, investment, trade facilitation, and people-to-people exchanges for the humanitarian strategy. Against this backdrop, the overarching objective of this study was to analyze the impact of the BRI and Chinese outward foreign direct investment (OFDI) on the bilateral trade between China and Sub-Saharan Africa countries. The investigation was carried out using a trade gravity model, balanced panel dataset, and multivariate regression estimation strategy for robustness checks covering 16 years. The result showed that Chinese OFDI, home, and host country’s GDP and GDP per capita income variables have a positive and statistically significant impact on the bilateral trade. Moreover, the BRI has explained positively on the bilateral trade; however, it does not have enough evidence to stimulate significantly, and it usually takes a long time for the effects of the BRI investment on trade and OFDI. The study also found that geographical distance and official exchange rates have explained negatively and statistically significant impact on the bilateral trade.

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“…M&As is not entirely dependent on market forces but is usually subject to approval by the relevant institutions of the host country. The issue of national security concerns is an important motive that firms need to consider in cross-border M&As because both developed and developing countries have expressed national security concerns over Chinese enterprises' foreign investment (Wang and Gao, 2019). For example, Lu and Li (2012) posited that, among various forms of investment protection, national security review is the most important.…”

Section: Literature Reviewmentioning

confidence: 99%

Are Chinese Acquirers Discriminated against in Cross‐border Mergers and Acquisitions? An Analysis Based on Covered Transactions Filed with CFIUS

Chen

Wang

2020

China and World Economy

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This study employs a sample of covered transactions filed with the Committee on Foreign Investment in the United States (CFIUS) of cross-border mergers and acquisitions targeting American companies based on publicly available news reportsand announcements to examine the heterogeneity hypothesis in the CFIUS review process. A comparative analysis of case studies and an empirical analysis of logit regressions are performed. We also explore how CFIUS reviews may have an impact on corporations' future mergers and acquisitions decisions in a panel data model setting.The results show that both unfair treatment in CFIUS review and the deterrent effect of CFIUS interventions have contributed to the recent sharp decline in China's direct investment in the US.

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Forty Years Development of China's Outward Foreign Direct Investment: Retrospect and the Challenges Ahead

Cited by 30 publications

References 22 publications

Does Chinese Inward Foreign Direct Investment Improve the Productivity of Domestic Firms? Horizontal Linkages and Absorptive Capacities: Firm-Level Evidence from Ethiopia

Does Chinese Inward Foreign Direct Investment Improve the Productivity of Domestic Firms? Horizontal Linkages and Absorptive Capacities: Firm-Level Evidence from Ethiopia

Analysis of the Bri and China’s Ofdi in Sub-Saharan Africa

Are Chinese Acquirers Discriminated against in Cross‐border Mergers and Acquisitions? An Analysis Based on Covered Transactions Filed with CFIUS

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