China's Regulatory Framework for Outward Foreign Direct Investment

China Economic Journal, 7(1), 141-163

36 Pages Posted: 15 Nov 2013 Last revised: 22 Feb 2018

See all articles by Karl P. Sauvant

Karl P. Sauvant

Columbia University - Columbia Center on Sustainable Investment

Victor Zitian Chen, PhD, CFA

Fidelity Investments; GoPeaks

Date Written: November 6, 2013


China has become the world’s third largest outward investor, behind the United States and Japan. A growing body of literature suggests that China’s regulatory framework for outward foreign direct investment (OFDI) is a determinant of the country’s rising OFDI. This paper presents a holistic review of that framework, including some possibilities for its improvement. Overall, China’s framework serves two objectives: to help Chinese firms become more competitive internationally and to assist the country in its development effort. In pursuing these objectives, the regulatory framework has moved from restricting, to facilitating, to supporting, to encouraging OFDI; but there are still strong elements of administrative control that make it cumbersome. State-owned enterprises (SOEs) seem to benefit particularly from the current framework when internationalizing through FDI.

Keywords: China, outward foreign direct investment, OFDI, formal institutions, government

JEL Classification: F21, F23, F31, F65, G18, G28, G38, H1, H2, H3, K2, K3, M16, P33

Suggested Citation

Sauvant, Karl P. and Chen, Victor Zitian, China's Regulatory Framework for Outward Foreign Direct Investment (November 6, 2013). China Economic Journal, 7(1), 141-163, Available at SSRN:

Karl P. Sauvant (Contact Author)

Columbia University - Columbia Center on Sustainable Investment ( email )

Columbia Law School
435 W 116th Street
New York, NY 10027
United States

HOME PAGE: http://

Victor Zitian Chen

Fidelity Investments ( email )

United States

GoPeaks ( email )

Charlotte, NC 9808001123 28277
United States


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