Abstract
This study analysed the impact of appreciation of the renminbi (RMB) on China's outward foreign direct investment (OFDI) on a theoretical and empirical basis. Based on theoretical analysis, we found that the appreciation of RMB can promote OFDI, as it can lower the threshold for foreign direct investment. Then, by constructing export-weighted effective exchange rates, we found that for every 1% appreciation of the RMB, the probability of enterprises engaging in OFDI increased by 0.0069 over 2001–2012.
Acknowledgements
We thank the editor and Professor Lex Zhao and the anonymous referee for reviewer for their insightful comments very useful suggestions, which we think have substantially improved the paper. All the remaining errors are our own. Authors are in alphabetical order and contribute equally to the paper and all could be treated as joint first authors.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Notes
1 We also analysed the role of exchange rate uncertainty on Chinese OFDI in Appendix 2. From Table A3, we found that a company is more likely to implement OFDI when the exchange rate is less volatile.