Perspectives on China's Outward Foreign Direct Investment

Journal of International Business Studies, 2008

University of Alberta School of Business Research Paper No. 2013-243

Posted: 26 May 2013 Last revised: 4 Jun 2013

See all articles by Randall Morck

Randall Morck

University of Alberta - Department of Finance and Statistical Analysis; National Bureau of Economic Research (NBER); European Corporate Governence Institute; Asian Bureau of Finance and Economic Research

Bernard Yin Yeung

National University of Singapore - Business School

Minyuan Zhao

University of Pennsylvania

Date Written: June 30, 2006

Abstract

Recent economic data reveal that, at the infant stage, China’s outward foreign direct investment (FDI) is biased towards tax havens and Southeast Asian countries and are mostly conducted by state-controlled enterprises with government sanctioned monopoly status. Further examination of China’s savings rate, corporate ownership structures, and bank-dominated capital allocation suggests that, although a surge in China’s outward FDI might be economically sensible, the most active players have incentives to conduct excessive outward FDI while capital constraints limit players that most likely have value-creating FDI opportunities. We then discuss plausible firm-level justifications for China’s outward FDI, its importance, and promising avenues for further research.

Keywords: outward foreign direct investment; China, macro perspective, corporate ownership structure, capital market distortion, micro firm theory

Suggested Citation

Morck, Randall K. and Yeung, Bernard Yin and Zhao, Minyuan, Perspectives on China's Outward Foreign Direct Investment (June 30, 2006). Journal of International Business Studies, 2008; University of Alberta School of Business Research Paper No. 2013-243. Available at SSRN: https://ssrn.com/abstract=2269965

Randall K. Morck (Contact Author)

University of Alberta - Department of Finance and Statistical Analysis ( email )

2-32C Business Building
Edmonton, Alberta T6G 2R6
Canada
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780-492-3325 (Fax)

National Bureau of Economic Research (NBER)

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European Corporate Governence Institute ( email )

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Belgium

Asian Bureau of Finance and Economic Research ( email )

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1 Business Link
Singapore, 117592
Singapore

Bernard Yin Yeung

National University of Singapore - Business School ( email )

15 Kent Ridge Drive
BIZ 1 Level 6
Singapore, 119245
Singapore
65 6516 3075 (Phone)
65 6779 1365 (Fax)

Minyuan Zhao

University of Pennsylvania ( email )

The Wharton School
Philadelphia, PA 19104-6370
United States

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