A Study of Chinese OFDI Drivers in Five of the Top Investment Recipient Countries

The purpose of this thesis is to identify, cluster and evaluate the impact of economic-related and politic-related, pull and push determinants for the recent dynamics of Chinese Outward Foreign Direct Investment in light of the expansion of the Belt and Road Initiative. The timespan of the research ranges from 2015 to 2019 since Chinese international market-seeking and resource-seeking strategies had consistently completed their shift to technology-seeking and efficiency-seeking intents during the referred period. Contrarily to the widely developed gravity models to study international trade and investment flows, a set of unconventional variables was selected and converged in the design of the Augmented Chinese OFDI Model. More precisely, it is assumed that the yearly share of Chinese OFDI (dependent variable) in the top investment recipient countries is well explained by some factors in the detected five foreign countries (USA, Australia, Germany, Vietnam, Indonesia) such as the share of high-tech exports over the total amount of exports, the contribution of the secondary sector (including construction) to the total GDP, the availability of land for infrastructural and agricultural purposes and the yearly share of military expenditure over the total public expenses. Therefore, a balanced panel data was built, and a multivariate OLI regression was run after checking on the consistency of the necessary econometric conditions. The main findings include respectively a negative correlation between economic-related variables and the dependent variables and a positive correlation between political-related determinants and the dependent variable. Surprisingly, an incredibly high positive correlation was found between the yearly share of military expenditure in foreign countries and the share of Chinese OFDI directed to the respective countries during the same year. On the other hand, push factors seem to better explain the dynamics of Chinese OFDI, but the results are not robust enough to openly claim this statement. In the wake of the findings, macroeconomic and managerial implications were explored to draw concrete takeaways. Particularly, in a decade where Chinese MNEs have globally spread out their operations in the vests of valid alternatives to declining Western business philosophies, the investment flows still appear to be placed under careful scrutiny of the CCP which is still reluctant to unleash OFDI and make it follow exclusive market logics.