Assessing the effects of policies on China's outward foreign direct investment. Issue 5 (October 2021) - Yin, Tong
Highlights: This paper investigates the role of government policies in guiding and supporting China's outward foreign direct investment (OFDI). The paper distinguishes between Regulation Policies, Service Policies, Promotion Policies and Supervision Policies. This paper presents a methodology for collecting screening and coding policies; and creates novel indices to model those types of policies. findings are that the best policy instruments to support OFDI are 1) the easing of Regulation policies, 2) the introduction of Supervision and Service Policies. The best policy instruments to support OFDI are 1) the easing of Regulation Policies, 2) the introduction of Supervision and Service Policies. Policies are found not to impact on China's outward investment at national level. Promotion Policies are found not to impact on China's outward investment at the national level. Abstract: This paper discusses the determinants of China's outward foreign direct investment (OFDI) with a special focus on the role of government policy. In particular, we investigate the types of policies that are most influential in promoting OFDI. Our main contribution is to analyse, for the first time, China's OFDI policies by means of quantitative indicators. We refine policies definitions and distinguish between Regulation Policies, Service Policies, Promotion Policies and Supervision Policies, and we develop a methodology for collecting, screening and coding policies; then we create new indices to capture different types of policies. We find that Regulation Policies, Service Policies and the general attitude of the government have significant effects on China's OFDI at the national level.