- Florya Chronicles of Political Economy
- Vol: 4 Issue: 1
- China’s Outward Foreign Direct Investment Along "Belt and Road Initiative"
China’s Outward Foreign Direct Investment Along "Belt and Road Initiative"
Authors : Sedat Aybar, Meryem Gürel
Pages : 89-105
View : 10 | Download : 3
Publication Date : 2018-04-10
Article Type : Other
Abstract :This article examines the motivations and determinants of China’s Outward Foreign Direct Investment (OFDI) within the new lands called The Belt and Road Initiative (BRI) inspired by the ancient Silk Road. Although China’s OFDI has always been important for academic interest, OFDI along the BRI is a distinctive economic policy for China at the global stage. The existing literature demonstrates that China’s OFDI with its economic policy is based on its national modernization. As China’s multivariate domestic economy requires different strategies with diversified outward investments along the BRI and non-BRI countries, it has positive return to the country. The investigation hereby indicates that China’s OFDI has different motivations for natural resources, strategic assets, market and efficiency seeking. Its determinants are cost advantage, institutions, market size, national agglomeration, cultural proximity, free trade agreement (FTA) expanding trade relations and qualified labor in low-income and middle-income countries. The transfer of CO2 emissions requiring industrial selection is also a driver of China’s OFDI aiming the reduction of air pollution for climate change. Besides the efforts of China, the state-owned enterprises need reforms to broaden ownership for further outward investments as an implication.Keywords : China, OFDI, Belt and Road Initiative, Chinese SOES