China's Outward Investment and Its Geopolitical Determinants

• In Event: China, Geopolitics, and Competition

Abstract

The debate on China’s oversea “investments” is ongoing. Is China’s economic presence evidence for “debt-trap diplomacy,” creation of a sphere of influence, or positive economic engagement and development? However, the term “investments,” as generally conceived, is inaccurate. The discussion on China’s investment refers to both economic development finance, which is the state-initiated financial transaction, and outward foreign direct investment (OFDI), which is the corporation’s transnational economic activity.

In this paper, I aim to investigate China’s OFDI and foreign policy objectives. The study on China’s OFDI has been dominated by international business scholars that usually take a firm-centric view when examining China’s oversea investments. At the age of the Belt and Road Initiative (BRI) and intensifying competition between China and the US, I argue that the firm-centric lens has become increasingly inadequate. If we incorporate the Chinese state in its firms’ overseas investment calculation, what factors might come into play? This paper aims to identify what foreign policy considerations can influence China’s OFDI. I propose to utilize the traditional “host country determinants” framework while adding Beijing’s important geopolitical considerations as independent variables. This study will use panel data analysis that includes China’s investment in all countries for two decades.

Author

• Wilson Han, University at Albany, SUNY