Does China’s OFDI Displace OECD’s OFDI?

In the foregoing two chapters, we have studied China’s outward FDI (OFDI) by examining the underlying motivations and the locational determinants in a static framework, and by investigating the dynamic adjustment of China’s OFDI and its relation to China’s inward FDI (IFDI) in a dynamic framework. We have shed some lights on the causes of China’s OFDI, but the question remains as to what are the consequences of China’s surge in overseas investments? To quote The Economist:

In its drive to secure reliable supplies of raw materials, it is said, China is coddling dictators, despoiling poor countries and undermining Western efforts to spread democracy and prosperity. America and Europe, the shrillest voices say, are ‘losing’ Africa and Latin America. (The Economist, 13 March 2008)