Table Of ContentThe Determinants of Chinese Outward Direct
Investment
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The Determinants of Chinese Outward Direct Investment
Hinrich Voss
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The Determinants of
Chinese Outward
Direct Investment
Hinrich Voss
University of Leeds, UK
Edward Elgar
Cheltenham, UK • Northampton, MA, USA
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© Hinrich Voss 2011
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Contents
List of fi gures vi
List of tables vii
Abbreviations ix
Acknowledgements xi
1 Introduction 1
2 Internationalisation through foreign direct investment –
stylised facts and theoretical explanations 9
3 Chinese outward foreign direct investments – patterns and
explanations 56
4 Quantitative analysis and secondary data sources 108
5 Cross- sectional data analysis of the determinants of Chinese
outward direct investment 120
6 Conclusion 156
Appendix 162
References 165
Index 199
v
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Figures
1.1 Chinese OFDI stocks and fl ows (1980 to 2008) 2
1.2 Chinese cross- border mergers and acquisitions (1987 to 2007) 3
2.1 The Uppsala theory 22
2.2 The Chinese outward direct investment regime 53
3.1 Institutional actors in China’s OFDI framework 65
3.2 China’s approved outbound investment projects by industry
sector and host region (1979 to 2001) (% of total Chinese
projects in the region) 88
3.3 China’s approved outbound FDI value by industry sector and
host region (1979 to 2001) (% of total FDI to the region) 89
5.1 Model 1: Chinese OFDI – domestic institutions 125
5.2 Model 2: Chinese OFDI – international institutions 139
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Tables
2.1 The development of outward foreign direct investment stocks
by region (1980 to 2008) (Period average: USD billion and %
of total for each region) 10
2.2 The development of inward foreign direct investment stocks by
region (1980 to 2008) (Period average: USD billion and % of
total for each region) 13
2.3 Factors that infl uence the choice of an international investment
strategy 19
2.4 Eff ects of government actions on OFDI 32
3.1 Key OFDI regulations in Phase 1 (1979 to 1985) 69
3.2 Geographical distribution of China’s OFDI: accumulated stock
(1979 to 2005) (Period average stock in USD billion and % of
period average) 70
3.3 Key OFDI regulations in Phase 2 (1986 to 1991) 71
3.4 Key OFDI regulations in Phase 3 (1992 to 1998) 74
3.5 Geographical distribution of Chinese OFDI: accumulated
period average number of investment projects (1979 to 2004)
(Total number and % of total) 75
3.6 Key OFDI regulations in Phase 5 (2001 onwards) 78
3.7 Shifting investment approval responsibilities of state organs
based on investment volume thresholds 83
3.8 Key developments in the evolution of China’s OFDI regime
(1979 to 2009) 91
3.9 Historic and emergent investment behaviour of Chinese MNEs 98
4.1 Variable description and sources 117
5.1 Descriptive analysis of Chinese OFDI fl ow to OECD and
non- OECD countries in Model 1 (1984 to 2001) 127
5.2 Correlation matrix for Model 1 128
5.3 Results for the determinants of Chinese OFDI in Model 1
(SAFE data) 129
5.4 Descriptive analysis of Chinese OFDI fl ows to OECD and
non- OECD countries in Model 2 based on MOFCOM data
(1991 to 2003) 141
5.5 Correlation matrix of Model 2, estimation one (1991 to 2003) 142
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viii The determinants of Chinese outward direct investment
5.6 Descriptive analysis of Chinese OFDI fl ows to OECD and
non- OECD countries in Model 2, based on MOFCOM data
(2003 to 2007) 143
5.7 Descriptive statistics of all variables and the correlation matrix
Model 2, estimation two (2003 to 2007) 144
5.8 Results of the determinants of Chinese OFDI in Model 2
(1991 to 2003) (MOFCOM data) 146
5.9 Estimation results of the determinants of China’s OFDI in
Model 2 (2003 to 2007) 154
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Abbreviations
AIB Academy of International Business
AIB UK Academy of International Business UK Chapter
ASEAN Association of South East Asian Nations
BIT bilateral investment treaty
BOP balance of payments
CCP Chinese Communist Party or Communist Party of
China (CPC)
CIS Commonwealth of Independent States
CNOOC China National Off shore Oil Corporation
CNPC China National Petroleum Corporation
CNY Chinese Yuan Renminbi
COE collectively owned enterprise
COSCO China Ocean Shipping (Group) Co.
CSY Chinese Statistical Yearbook
DTT double taxation treaty
ECDC Economic Cooperation among Developing Countries
EIBA European International Business Academy
FDI foreign direct investment
FTA free trade agreement
FYP fi ve- year plan
GATT General Agreement on Tariff s and Trade
GDP gross domestic product
GNP gross national product
ICBC Industrial and Commercial Bank of China
IFC International Finance Corporation
IIA international investment agreement
IMF International Monetary Fund
IPA investment promotion agency
LM Lagrangian multiplier
MERCUSOR Mercado Común del Sur (Southern Common Market)
MNE multinational enterprise
MOFCOM Ministry of Commerce (formerly MOFERT and
MOFTEC)
MOFERT Ministry of Foreign Economic Relations and Trade
(until 1993)
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