Abstract
Using recent Chinese data on outward foreign direct investment (OFDI) (2003–11), this study shows that Chinese OFDI has expanded in both distant developing and developed countries. Statistical analysis suggests that Chinese investors are attracted to countries with large market size, rich resources and strategic assets, and demand a sound legal system but avoid countries with the best rule of law. Chinese investors do not directly respond to political risk and corruption. However, they favour politically stable locations when seeking markets and care about political stability and corruption control when seeking resources. Institutional factors play a more significant role in the investment decision making prior to the actual investments, but the moderating role of institutions is influential for the actual investments. Chinese investors are more likely to seek markets and resources in developing countries, with careful evaluation of institutional quality.
Funding
This work was supported by the Natural Science Foundation of China under Grant No. 41425001 and 41271130.