Unravelling the complex motivations behind China's outward FDI

Abstract

This study empirically investigates the dynamics of motivations behind China's outward foreign direct investment (FDI). Based on a dataset of 75 host countries of China's outward FDI, we test the relative importance of outward FDI motives in different time periods. We account for endogeneity issues due to unobserved host country-specific factors and reverse causality using a dynamic panel estimation approach. We find that over time increasing foreign market commitment, exploiting global network linkages, and the seeking of external resources (natural resources and strategic assets) have become more important in driving outward FDI from China.