While Global FDI Falls, China's Outward FDI Doubles

Abstract

In 2008, global FDI fell by around twenty percent, while China's outward FDI nearly doubled. This disparity is likely to continue in 2009 and 2010 as China invests even more overseas. This article explains the five key drivers of China's outward foreign direct investment: its need to secure natural resources to fuel rapid growth; its need for services like shipping and insurance to support the high export volumes of domestic firms; the acquisition of global brands by China's major enterprises; the loss of the monopoly position of large state-owned enterprises; and the movement of labour-intensive operations to cheaper overseas locations like Vietnam and Africa.

Key words:

• foreign direct investment
• China
• development
• investment policy

Additional information

Notes on contributors

Ken Davies

Ken Davies earned a Bachelor's degree in Chinese Studies and Sociology from the University of Leeds in 1967, a teaching certificate from the University of London in 1976, and an economics degree from the University of London in 1979.