Chinese Outward Direct Investment: Is There a China Model?

Abstract

Chinese outward direct investment (ODI) appears to differ from that of advanced economies. Is there a unique China model? By reviewing industry distributions of ODI data for 2003–2009, we found that Chinese ODI was not concentrated in industries that performed well either in exporting or domestically. Statistical analyses also confirmed that traditional variables, such as market size, production cost and legal environment, did not impact Chinese investors' choice of location for ODI. Instead, investors selected places where they could either learn advanced technologies or secure stable commodity supplies. We have tentatively concluded that the main purpose of the China model of ODI has not been to expand production overseas but to strengthen industries at home.

Keywords: China, location choice, outward direct investment, revealed comparative advantage

JEL Classification: E220, F210, F230