Host country environment and China’s outward foreign direct investment : risks and controversies
Foreign Direct Investment (FDI) is perhaps the most active form of working capital which facilitates international growth in a way that traverses continents and borders. However, the capital flows may also depend on host-country environmental factors and home-country policy orientations. China ha...
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| Format: | Theses and Dissertations |
| Language: | English |
| Published: |
2019
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| Online Access: | http://hdl.handle.net/10356/77194 |
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| Institution: | Nanyang Technological University |
| Language: | English |
| Summary: | Foreign Direct Investment (FDI) is perhaps the most active form of working capital which
facilitates international growth in a way that traverses continents and borders. However, the
capital flows may also depend on host-country environmental factors and home-country policy
orientations. China has been a vibrant investor in developing economies and an influential
global buyer from the early 2000s. Previous researches suggested that Chinese FDI
concentrated primarily in highly unstable countries with abundant natural resources and was
dominated by State-Owned Enterprises (SOEs). This study further discusses this question by
examining what host-country factors influence Chinese FDI outflows, with a special focus on
political-economic risks and intergovernmental partnerships. Based on the unique
characteristics of Chinese institutions that shape the player structure and the supervision
procedure of investors, I argue that Chinese investors are less sensitive to host country public
risks but are influenced by intergovernmental connections. Empirical models with data
covering 149 countries from 2007 to 2016 collectively show that Chinese investors crowd to
highly unstable and indebted countries and attracted by the economic partnership. These unique
investing propensities have aroused continuous controversies. Case studies of Zambia and
Germany work to demonstrate how the controversial projects may go politicalized and elicit
more stringent regulations targeting China. The study calls for formal risk-evaluating and
monitoring processes among Chinese investors, and prudence for host country governments in
attracting capital inflows, especially those already in debt and risks. |
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