This paper aims to investigate the primary motivations for China’s outward foreign direct investment (ODI) decisions.
Using a panel data sample covering the period 2003–2012 and a comprehensive set of 176 host countries.
This study finds that market size, trade variables and natural resource variables are strongly related to the Chinese ODI stocks. This indicates that Chinese ODI decisions are driven by both market- and resource-seeking motives. The subperiod sample test results lend even stronger support to the market-seeking motive for ODI.
These results seem to emerge from the policy changes that were undertaken during the sample period. Consistent with subgroup tests, this study finds that the main purposes of China’s ODI in the top 100 countries are natural resource explorations and production line replacements.
