The Determinants Of China Outward Foreigh Direct Investment Flux And Flow Direction

In the context of open economy, the rapid development of foreign direct investment (FDI) has been attached much attention. The flux and flow direction of FDI has experienced significant changes in the globe range, and it’s same to china. What changes have undergone on outward FDI of china? What are the determinants? All these require us to make full understand flux, flow direction and determinants of FDI.Aiming at these problems, this paper based on gravity model, which has been reconstructed. Firstly, used data of china outward FDI on 95 economies, which from 2003 to 2012. And examine the determinants of Chinese outward FDI. Considering that there were a large part of China’s foreign direct investment flows into offshore financial centers, because the ultimate purpose and the determining factor are more complex, which we needed careful interpretation. Based on this, using the different stages of world economics’ original experiences in a relatively long period of time to further reveal and validation the determinants of Chinese outward FDI. Finally, followed the overseas investment experiences of Asia neighbors Japan and South Korea, to analyze China’s overseas investment decisions, and as base references.The empirical result established that: the Chinese outward FDI has significant resources and market demand in developing economies, and in developed economies were seeking resources and strategic assets. The distance factor has a negative impact on China’s overseas investment. The host institution has great influences on Chinese resource-seeking FDI, particularly, china has great interest on developing economies, who has many resources and poor legal system level. Due to the complexity of the determinants of china outward FDI, when followed world economies original experience and took Japan and South Korea as reference found that GDP, PGDP and reserves play a positive role for FDI outflows. We forecasted that the proportion of Chinese investment in manufacturing and Africa will increase, while leasing and commercial services will decline accordingly.