Abstract
Foreign direct investment (FDI) (both inflows and outflows), together with the crisis in Southeast Asia, has been a critical external element of China’s international expansion. The chapter deals with the historical context of their influx, which has been causing growth in production and modernisation of domestic infrastructure. Economic expansion has gradually brought about the need to import huge volumes of raw materials and fuels, which China has dealt with in its new countries of origin. The authors closely monitor the development of FDI inflows and outflows and changes in their territorial structure as well as dynamically changing motives of the flows. They are also dedicated to the analysis of the Belt and Road Initiative and Made in China 2025 restoration projects and their contribution to country’s position in the FDI global map.
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Notes
- 1.
In the period between 1978 and 2007, this indicator averaged 37.5% for China, whereas during similar periods, Japan recorded its values at 35.8% (1961–1970), South Korea at 29% (1969–1983), Brazil at 21.4% (1962–1979) and Thailand at 29.5% (1970–1992) (Yanrui, 2009).
- 2.
- 3.
China’s savings rate reached its peak in 2008 and has slightly fallen in the following years. It was 49.3% in 2010. For comparison, the savings rate of the United States was 10% in the same year (EIU, 2017).
- 4.
The transfer of sovereignty over Hong Kong in 1997 has changed the status of FDI flows, which have started to be considered as the “intra-regional” investments. This approach of China differs from that of international organisations and results in many inaccuracies and differences in the data between individual databases. Source: Rosen (p. 380).
- 5.
For the world powers—the United States, Japan and the EU—China’s membership in the WTO was motivated mainly by China being forced to observe the world trade rules, including intellectual property protection. However, even after joining the WTO, China did not give a high priority to protecting intellectual property rights and foreign companies found themselves pulling the short end as they did not know that it is possible to build the same production hall with the same machinery and production programme that is able to produce even cheaper products in a close proximity to the foreign investor’s business (Kukliš, p. 72).
- 6.
For example, it is only 40% in the case of Indonesia.
- 7.
For comparison, South Korea has 84 Internet users per 100 people.
- 8.
These statistical differences and seasonal inconsistencies are also prevalent in the official statistics concerning investment flows due to a speculative nature of some investments. For example, while for 2015, MOFCOM reported FDI inflows to China at $126.7 bil. (MOFCOM, 2018), UNCTAD reported their value at $135.6 bil. (UNCTAD, 2016a), and so on.
- 9.
Specific feature of the transactions represented long-term contracts supplying Chinese energy demand. Another specific was the character of the locations—mostly politically high-risk countries, like Sudan, Mali, Lao PDR and similar countries not accepted as suitable locations for FDI by advanced economies.
- 10.
One of the examples is an acquisition of Ford by Geely Auto that was financed by China’s state-owned banks (Bank of China, China Construction Bank, Export-Import Bank of China).
- 11.
In June 2016, Albanian authorities accepted a deal with China State Construction in the value of €200 mil.
- 12.
In May 2016, Elektroprivreda Bosnia and Herzegovina and China’s Gezhouba Group signed an agreement for the construction of part of a lignite power plant in the total value of over €700 mil.
- 13.
In April 2018, several sources informed about preparing for Chinese investment from car manufacturing industry in the CEE region. It is highly possible that Chinese plan to establish the production plant in eastern Slovakia.
- 14.
The CEE-16 countries that China regards as the countries of its priority interest concerning trade and investment cooperation are: Albania, Bosnia and Herzegovina, Republic of Bulgaria, Republic of Croatia, Czech Republic, Republic of Estonia, Hungary, Republic Latvia, Republic of Lithuania, Republic of Macedonia, Montenegro, Republic of Poland, Romania, Serbia, Slovak Republic and Republic of Slovenia.
- 15.
An example is the first China–Europe railway crossing at Kazakhstan, Russia, Belarus and Poland. In the following years, various lines connecting different cities within the CEE region have been launched, for example, Wuhan to Pardubice, Czech Republic in 2012; Chengdu to Lodz, Poland in 2013. Railway connections have also been stimulating mutual trade since shipment takes around 12–21 days, competing with maritime transport (30–45 days needed).
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Baláž, P., Zábojník, S., Harvánek, L. (2020). FDI as a Driving Force of China’s Expansion. In: China's Expansion in International Business. Palgrave Macmillan Asian Business Series. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-21912-3_4
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