The Research Into The Influence Of Host Country’s Investment Opportunity On China’s Outward Direct Investment

The determining factors and motivation of Chinese outward direct investment is highly debatable. Whether Chinese outward direct investment is profit-driven should be further verified.This article utilizes Investment Opportunity, an indicator proposed by Bekaert that could be used to predict a country’s economy growth and investment growth, to calculate the most recent worldwide investment opportunities. Based on this calculation, this article uses 51 countries’ 2003~ 2012’s data, utilizes cross countries’ panel data model and discusses the relationship between host country’s investment opportunity and Chinese outward direct investment from the perspective of empirical analysis. Alternatively speaking, the problem of whether Chinese outward direct investment to a country “follows” host country’s investment opportunity is probed. The empirical study reveals that, overall China’s outward direct investment does not “follow” host country’s investment opportunity. However, Chinese outward direct investment toward developed countries and developing countries presents distinctly different characteristics: Chinese outward direct investment to developed countries “follows” host country’s investment opportunity to a certain extent, while Chinese outward direct investment to developing countries does not “follow” host country’s investment opportunity. The above conclusion is reinforced if we consider the host country’s financial development, and the politics stability.Finally, this article discovers that the Global Financial Crisis in 2008 does not exert a big influence on Chinese outward direct investment. Nevertheless, Chinese outward direct investment pays more attention on market rationality. At the end of this article, it puts forward that the transition from scale expansion to efficiency expansion of Chinese outward direct investment is imperative.