Skip to main content
SpringerLink
Log in

China’s overseas investment policy: evolution and characteristics

  • Original Article
  • Published:
International Politics Aims and scope Submit manuscript

Abstract

This article aims to challenge the view in the existing literature that China’s outward foreign direct investment (OFDI) is guided by the Chinese government in a planned, purposeful, and unified way. By analysing the characteristics of the four stages of China’s OFDI policy, it is argued that China’s OFDI policy has gradually shifted from political opposition to selective approval and then enthusiastic encouragement, and policy relaxation has been pushed forward against the resistance of some government departments with conflicting interests. The evidence shows that the impact of China’s OFDI policy on its OFDI is not always as clear, unified, and purposeful as commonly believed, but tends to appear increasingly incoherent, disorganised, and disordered over time. In addition, Chinese enterprises usually aim to maximise their own commercial interests when investing overseas, rather than always following the policy guidance, giving priority to national interests, and achieving so-called strategic goals.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1

Source: United Nations Conference on Trade and Development

Fig. 2

Source: MOFCOM and National Bureau of Statistics of China

Fig. 3

Source: United Nations Conference on Trade and Development

Similar content being viewed by others

References

  • Aikman, A. (2016) Secret Us Poll on China Darwin Port Deal. The Australian, 8 March.

  • Alon, I., J. Chang, M. Fetscherin, C. Lattemann, and J. McIntyre. 2009. China: Rules Globalization and Political Transformation. UK: Palgrave Macmillan.

    Google Scholar 

  • An, B. (2017) Guojia fagaiwei jiedu weihe xianzhi fangdichan deng jingwai touzi: Chuxian fei lixing qingxiang [The NDRC’s Interpretation of Why Overseas Investments Such as Real Estate Are Restricted: An Irrational Trend]. Xinhuanet, 18 November.

  • Bath, V. 2012. Foreign Investment, the National Interest and National Security-Foreign Direct Investment in Australia and China. Sydney Law Review 34 (1): 5–34.

    Google Scholar 

  • Bernasconi-Osterwalder, N., Johnson, L. and Zhang, J. (2021) Chinese Outward Investment: An Emerging Policy Framework: A Compilation of Primary Sources. The International Institute for Sustainable Development and the Institute for Integrated Economic Research.

  • Brink, T.T. 2015. Chinese Firms ‘Going Global’: Recent OFDI Trends, Policy Support and International Implications. International Politics 52 (6): 666–683.

    Article  Google Scholar 

  • Buckley, P.J., J.L. Clegg, A.R. Cross, and H. Voss. 2010. What Can Emerging Markets Learn From the Outward Direct Investment Policies of Advanced Countries? In Foreign Direct Investments From Emerging Markets, ed. K.P. Sauvant, G. McAllister, and W.A. Maschek, 24–276. New York: Palgrave Macmillan.

    Google Scholar 

  • Buckley, P. J., Clegg, J. L., Cross, A. R. and Voss, H. (2008) Emerging Countries’ Policies on Outward FDI—Lessons from Advanced Countries. In: Five-Diamond International Conference Cycle: Thinking Outward: Global Players from Emerging Markets, April, pp. 28–29.

  • Cai, G.K. 1999. Outward Foreign Direct Investment: A Novel Dimension of China’s Integration Into the Regional and Global Economy. The China Quarterly 160: 856–880.

    Article  Google Scholar 

  • Chen, J. 2008. Chinese Law: Context and Transformation. Boston: Martinus Nijhoff Publishers.

    Book  Google Scholar 

  • Cheng, S., and R.R. Stough. 2008. The Pattern and Magnitude of China’s Outward FDI in Asia. In New Dimensions of Economic Globalization, ed. R.S. Rajan, R. Kumar, and N. Virgill, 3–16. World Scientific.

    Google Scholar 

  • Cheng, L., and X. Zhou. 2007. Characteristic of the New Policy System of Chinese Foreign Direct Investment. China-USA Business Review 6 (3): 19–21.

    Google Scholar 

  • China’s State Council (ed.) (2017) China’s State Council Publishes New Guidance on Regulation of Outbound Investment, https://www.cov.com/-/media/files/corporate/publications/2017/09/chinas_state_council_publishes_new_guidance_on_regulation_of_outbound_investment.pdf. Accessed 9 March 2019.

  • Choosin, T. 2018. Foreign Direct Investment From the People’s Republic of China. In Business Transformation in China, ed. H.C. De Bettignies. Routledge.

    Google Scholar 

  • Dollar, D (2017) China’s New Investment Rules. Brookings Institution, August 23.

  • Grigg, A (2017) How Landbridge’s Purchase of the Darwin Port Killed Perceived Wisdom on China. The Australian Financial Review. 7 July, https://www.afr.com/world/asia/how-landbridges-purchase-of-the-darwin-port-killed-perceived-wisdom-on-china-20170706-gx66r8. Accessed 23 January 2024.

  • Guo, H. 1984. On Establishment of Joint Ventures Abroad. In Almanac of China’s Foreign Economic Relations and Trade, ed. X. Lu. Beijing: China Economical Publishing House.

    Google Scholar 

  • Guo, L., J. Lu, and S. Gu. 2018. Gaige kaifang sishi nian zhongguo duiwai zhijie touzi huigu yu zhanwang [Review and Prospect of China’s Outward Direct Investment in the Past 40 Years of Reform and Opening up]. Asia-Pacific Economic Review 4: 13.

    Google Scholar 

  • Guo, Z (2009) 2003 Nian guowuyuan jigou gaige [2003 institutional reform of the state council], 16 January, http://www.gov.cn/test/2009-01/16/content_1207006.htm. Accessed 19 March 2020.

  • Heberer, T (2003) Private Entrepreneurs in China and Vietnam: Social and Political Functioning of Strategic Groups. Brill, 4.

  • Huan, G. 1986. China’s Open Door Policy, 1978–1984. Journal of International Affairs 39 (2): 1–18.

    Google Scholar 

  • Huang, W and Wilkes, A (2011) Analysis of China’s Overseas Investment Policies. CIFOR Working Paper, 79.

  • Kanamori, T. and Zhao, Z (2004) Private Sector Development in the People’s Republic of China. Asian Development Bank Institute Manila, https://www.adb.org/sites/default/files/publication/159390/adbi-private-sector-development-people-republic-china.pdf. Accessed 19 May 2019.

  • Kang, L., F. Peng, Y. Zhu, and A. Pan. 2018. Harmony in Diversity: Can the One Belt One Road Initiative Promote China’s Outward Foreign Direct Investment? Sustainability 10 (9): 1–28.

    Article  Google Scholar 

  • Lampton, D. 1987. Policy Implementation in Post-Mao China, vol. 7. Berkeley and Los Angeles: University of California Press.

    Google Scholar 

  • Lampton, D.M. 1992. A Plum for a Peach: Bargaining, Interest, and Bureaucratic Politics in China. In Bureaucracy, Politics, and Decision Making in Post-Mao China, ed. G. Lieberthal and M. Lampton, 33–58. Berkeley: University of California Press.

    Google Scholar 

  • Li, D. 2007. The Compressed Development of Chinese OFDI and Its Impact on Chinese Government Investment Policies. International Business 38 (4): 499–518.

    Google Scholar 

  • Li, J and Zuo, M (2013) Expansion of National Development and Reform Commission criticised. South China Morning Post, 12 March, https://www.scmp.com/news/china/article/1188750/expansion-national-development-and-reform-commission-criticised. Accessed 13 May 2018.

  • Lieberthal, K.G., and D.M. Lampton, eds. 1992. Bureaucracy, Politics, and Decision Making in Post-Mao China. Berkeley: University of California Press.

    Google Scholar 

  • Lieberthal, K.G., and M. Oksenberg. 1990. Policy Making in China: Leaders, Structures, and PROCESSES. Reprinted: Princeton University Press.

    Google Scholar 

  • Liew, H.L. 2014. Policy Elites in the Political Economy of China’s Exchange Rate Policymaking. Journal of Contemporary China 13 (38): 21–51.

    Article  Google Scholar 

  • Lin, G., and M.R. Schramm. 2003. China’s Foreign Exchange Policies Since 1979: A Review of Developments and an Assessment. China Economic Review 14 (3): 246–280.

    Article  Google Scholar 

  • Liou, C. 2009. Bureaucratic Politics and Overseas Investment by Chinese State-owned Oil Companies: Illusory Champions. Asian Survey 49 (4): 670–690.

    Article  Google Scholar 

  • Lu, J. 2001. China’s Entry into WTO and Utilizing Foreign Capital, Overseas Investment. Beijing: University of International Business and Economic Press.

    Google Scholar 

  • Ma, Y., and H. Overbeek. 2015. Chinese Foreign Direct Investment in the European Union: Explaining Changing Patterns. Global Affairs 1: 4–5.

    Article  Google Scholar 

  • MacFarquhar, R. 1997. The Succession to Mao and the End of Maoism, Chap. 4. In The Politics of China: the Eras of Mao and Deng, ed. R. MacFarquhar, 248–339. Cambridge University Press.

    Chapter  Google Scholar 

  • Maschek, W.A., G.A. McAllister, and K.P. Sauvant, eds. 2010. Foreign Direct Investments From Emerging Markets: The Challenges Ahead. New York: Palgrave Macmillan.

    Google Scholar 

  • Meunier, S. 2014. ‘Beggars Can’t be Choosers’: The European Crisis and Chinese Direct Investment in the European Union. Journal of European Integration 36 (3): 283–302.

    Article  Google Scholar 

  • Ministry of Commerce of China Department of Foreign Investment and Economic Cooperation (2013) Summary 2012 Statistical Bulletin of China’s Outward Foreign Direct Investment. The Ministry of Commerce of China.

  • Ministry of Commerce of People’s Republic of China, National Bureau of Statistics of People’s Republic of China, & State Administration of Foreign Exchange (2012) 2011 Statistical Bulletin of China’s Outward Foreign Direct Investment. China Statistics Press. http://images.mofcom.gov.cn/hzs/201309/20130923082710756.pdf. Accessed 23 May 2020.

  • Ministry of Commerce of the People’s Republic of China (2016) Fazhan gaige wei, shangwu bu, renming yinhang, waihui ju si bumen fuze ren jiu dangqian duiwai touzi xingshi xia jiaqiang duiwai touzi jianguan da jizhe wen [the Heads of the Four Departments of the Development and Reform Commission, the Ministry of Commerce, the People’s Bank of and State Administration of Foreign Exchange of China Gave a Press Conference on Strengthening the Supervision of Outbound Investment under the Current Situation of Outbound Investment]. Xinhua News Agency, 6 December, http://www.mofcom.gov.cn/article/ae/ai/201612/20161202082006.shtml. Accessed 23 April 2019.

  • Morrison, W.M. 2013. China’s Economic Rise: History, Trends, Challenges, and Implications for the United States. Washington: Congressional Research Service.

    Google Scholar 

  • OECD (ed.) (2009) 2008 Niandu zhong guo baogao: Guli fu zeren de shangye xingwei [OECD Investment Policy Reviews: China 2008: Encouraging Responsible Business Conduct]. China Economic Publishing House, https://www.oecd.org/daf/inv/investmentfordevelopment/42382852.pdf, Accessed 25 April 2019.

  • Poncet, S. 2010. Inward and Outward FDI in China. In China and the World Economy, ed. D. Greenaway, C. Milner, and S. Yao, 112–134. London: Palgrave Macmillan.

    Chapter  Google Scholar 

  • Procurement, G. S. S. (1998) China’s WTO Accession: Foreign Investment. In: K. Anderson (ed.) Centre for International Economic Studies, University of Adelaide, https://www.adelaide.edu.au/cies/documents/papers/sp9810.pdf, Accessed 25 August 2020.

  • Sauvant, K.P., and M.D. Nolan. 2015. China’s Outward Foreign Direct Investment and International Investment Law. Journal of International Economic Law 18 (4): 893–934.

    Google Scholar 

  • Shen, Y. (2013) Zhongyao licheng:30 Nianlai zhongguo zhengfu jigou gaige zhi lu [Important course: the reform of Chinese government institutions in the past 30 years]. Reuters, 11 March, https://cn.reuters.com/article/factbox-china-admin-reform-idCNCNE92903D20130310, Accessed 25 August 2020.

  • Shi, W. (ed.) (2009) Gongheguo de zuji—1992 nian: Queli shichang jiingji tizhi de gaige mubiao [Republic’s footprint—1992: establishing the goal of reform of the market economic system]. Xinhua News Agency, 24 September. http://www.gov.cn/jrzg/2009-09/24/content_1425253.htm, Accessed 15 September 2020.

  • Steinfeld, E.S. 2004. Market Visions: The Interplay of Ideas and Institutions in Chinese Financial Restructuring. Political Studies 5 (4): 643–663.

    Article  Google Scholar 

  • Sze, N. and Wu, F. (2016) “One Belt, One Road” The Internationalization of China’s SOEs (Volume V). Deloitte Perspective, https://www2.deloitte.com/cn/en/pages/about-deloitte/articles/deloitte-perspective-v5-chapter2.html. Accessed 23 January 2024.

  • Tan, R. (1999) Foreign Direct Investment Flows to and from China. Philippine APEC Study Canter Network Discussion Paper, September.

  • Tang, F. (2017) China sets new rules on overseas investment for its biggest deal makers. South China Morning Post, 27 December, https://www.scmp.com/news/china/economy/article/2125725/china-sets-new-rules-overseas-investment-its-biggest-deal-makers, Accessed 15 August 2020.

  • Textor, C. (2021) Capital Stock of Chinese FDI 2010–2020. Statista, 28 October, https://www.statista.com/statistics/865550/china-stock-of-direct-investments-abroad/#statisticContainer. Accessed 10 August 2022.

  • UNCTAD (2013) World Investment Report 2013: Global Value Chains: Investment and Trade for Development. UN, https://unctad.org/system/files/official-document/wir2013_en.pdf. Accessed 17 June 2022.

  • Voss, H. (2011) The Determinants of Chinese Outward Direct Investment. Edward Elgar Publishing.

  • Wall, D. (1997) OECD Development Centre Working Papers. Organisation for Economic Co-operation and Development, 1 March.

  • Wang, D. 2010. China’s Trade Relations with the United States in Perspective. Journal of Current Chinese Affairs 39 (3): 165–210.

    Article  Google Scholar 

  • Wang, Y. 2016. Offensive for Defensive: The Belt and Road Initiative and China’s New Grand Strategy. The Pacific Review 29 (3): 455–463.

    Article  Google Scholar 

  • Wang, C., Wen, Y. and Han, F. (2012) Study on China’s Outward FDI. Procedia Environmental Sciences 12(A): 543–549.

  • Wong, J., and S. Chan. 2013. China’s Outward Direct Investment: Expanding Worldwide. China: An International Journal 1 (2): 273–301.

    Article  Google Scholar 

  • Wrobel, M.R. 2019. Chinese Geopolitics in Southeast Asia: A New Pattern of Economic Power Within ASEAN? Asiatische Studien - Études Asiatiques 73 (1): 149–191.

    Article  Google Scholar 

  • Wu, H., and C. Chen. 2001. An Assessment of Outward Foreign Direct Investment From China’s Transitional Economy. Europe-Asia Studies 53 (8): 1235–1254.

    Article  Google Scholar 

  • Yin, X., N. Stender, and J. Song. 2003. PRC Outward Investment: Liberalization Momentum Builds. China Law & Practice 17 (10): 5–7.

    Google Scholar 

  • Yu, A. and Hwang, B (2005) Chinese Companies on the Global M&A Stage Domestic Regulatory Issues. China Law & Practice 19.

  • Yu, M. and Zhao, X. (2014) Woguo “zou chuqu” zhanlue de xingcheng ji tuidong zhengce tixi fenxi [the Formation of China’s “Going out” Strategy and the Analysis of the Policy System]. Ministry of Economic Information and China Council for the Promotion of International Trade, January, http://oldwww.ccpit.org/Contents/Channel_1276/2007/0327/30814/content_30814.htm. Accessed 10 August 2020.

  • Yu, R. (2006) Guowuyuan changwu hui tongguo guli guifan qiye duiwai touzi hezuo yijian [the Standing Committee of the State Council Encourages and Standardises the Opinions of Enterprises on Overseas Investment and Cooperation]. China News, October 25, http://www.chinanews.com/other/news/2006/10-25/809947.shtml. Accessed 16 August 2019.

  • Yuan, L and Tsai, T (2000) Foreign Direct Investment Policy in China. China Review, pp. 223–247.

  • Zhan, J.X. 1995. Transnationalization and Outward Investment: The Case of Chinese Firms. Transnational Corporations 4 (3): 67–100.

    Google Scholar 

  • Zhang, Y. 2003. China’s Emerging Global Businesses: Political Economy and Institutional Investigations. UK: Palgrave Macmillan.

    Book  Google Scholar 

  • Zheng, Y., and J. Yi. 2017. China’s Rapid Accumulation of Foreign Exchange Reserves and Its Policy Implications. China & World Economy 15 (1): 14–25.

    Article  Google Scholar 

  • Zhou, X. (2018) China Focus: China 2017 FDI rises to record high, ODI falls. Xinhuanet, 16 January, http://www.xinhuanet.com/english/2018-01/16/c_136900334.htm. Accessed 14 July 2019.

  • Zhu, R (2001) Report on the Outline of the Tenth Five-Year Plan for National Economic and Social Development. The Central People’s Government of China: Xinhua News Agency, 5 March, http://www.gov.cn/english/official/2005-07/29/content_18334.htm#targetText=In%20light%20of%20the%20situation,democracy%20and%20the%20legal%20system, Accessed 19 August 2019.

  • Zu, H. 2022. A New Perspective on Motivations Behind Chinese Overseas Investment: A Case Study on the Darwin Port Deal. Australian Journal of Politics & History 68 (3): 467–483.

    Article  Google Scholar 

Download references

Acknowledgements

The author expresses her gratitude for the sponsorship by UNSW Tuition Fee Scholarship and would like to thank Associate Professor Jian Zhang for very valuable comments on an earlier version of this article. The authors would also like to thank the anonymous reviewers for their careful reading of our manuscript and their many insightful comments and suggestions.

Author information

Authors and Affiliations

  1. Institute of Area and International Communication Studies, Shenzhen University, Shenzhen, China

    Haoyue Zu

Authors
  1. Haoyue Zu
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Haoyue Zu.

Ethics declarations

Conflict of interest

None.

Additional information

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Rights and permissions

Springer Nature or its licensor (e.g. a society or other partner) holds exclusive rights to this article under a publishing agreement with the author(s) or other rightsholder(s); author self-archiving of the accepted manuscript version of this article is solely governed by the terms of such publishing agreement and applicable law.

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Zu, H. China’s overseas investment policy: evolution and characteristics. Int Polit (2024). https://doi.org/10.1057/s41311-024-00568-7

Download citation

  • Accepted:

  • Published:

  • DOI: https://doi.org/10.1057/s41311-024-00568-7

Keywords

Search

Navigation