A Study On Assessment Of Scale And Structure Of China’s OFDI

Since the beginning of 21 st century, China’s OFDI has enjoyed an average annual growth rate of over 36% from the first disclosure of statistical bulletin in 2003. Just after ten years, the scale of China’s OFDI became the third largest in the world. Every year, the flow of OFDI maintains more than 100 billion dollars, which means more than 1% of GDP. As the scale becomes larger and larger, OFDI will also be bound to have a greater impact on the economy.China’ OFDI is very important to China. The Chinese government hopes to obtain foreign natural resources through OFDI, in order to ensure the supply of energy and raw materials for the industrialization of China. Now China is in urgent need of industrial upgrading and transformation of the economy. Reverse technology spillover effect that OFDI brings will undoubtedly accelerate the progress of science and technology of China, and enhance China’s position in the international industrial chain, and lay the foundation for the full realization of a well-off society in an all-round way.However only a real understanding of the current situation of China’s OFDI can help analyze problems and formulate policies, in order to better serve the overall goal of China’s economy and society. Therefore, this paper evaluates the situation of China’s OFDI from the total amount and several structures.According to the theory of Dunning’s IDP theory that China’s foreign direct investment is at the end of the third stage, which is similar to many scholars’ opinion. But after further analysis of IDP theory, and the comparison of Japan, South Korea, Taiwan of China, We found that China’s foreign direct investment now is ahead of the development of the ownership-specific advantage.Structurally, China’s OFDI is mainly from central enterprises and enterprises in the provinces of east China. Industry allocation concentrates on the financial industry, mining industry, wholesale and retail industry. These industries accounts for significantly higher proportion, while the manufacturing industry is obviously not enough. As for regional allocation, Europe and North America is main destination, but their proportion in OFDI is lower than their GDP status. Asia, Africa and Oceania’ OFDI accounts for higher proportion than that of their GDP.Since entering the 21 st century, China’s foreign exchange reserves have risen considerably. The advantage of foreign exchange reserves is a special kind of ownership-specific advantage, which stimulates the boost of China’s OFDI. The advantage is mainly enjoyed by the central government-owned companies in the early age, which forms the first Dual Sector. The early take-off of OFDI is in close relationship with the first Dual Sector. In recent years, the eastern provinces of China successfully achieve steady development and industrial transformation and upgrading. The level of economic development nearly enters the threshold of the developed countries. Ownership advantages appear gradually and OFDI begins to surge, which forms the second Dual Sector. In Dual-Sector model, we can see that, although from the total, China, a developing country, which seems lack of ownership advantage, do not have the basis of large-scale OFDI; however, after the analysis of structure, we find that central government-owned companies and enterprises in the eastern provinces have ownership advantages, which in the end promote the capital output heat.Dual-sector model also explains the industry and the location allocation. The disproportion of central government-owned enterprises’ OFDI leads to that of Asia, Africa and Oceania’ OFDI. The disproportion of the enterprises in provinces of east China leads to that of wholesale and retail trade industry. Now, Chinese companies does not have enough motive to make market-oriented OFDI and labor-oriented OFDI, which leads to low proportion of manufacturing industry. At the same time, lack of the technology-oriented OFDI can be seen from lower-than-expected level of OFDI in European and North American.This helps explain many problems of China’s OFDI, including that the proportion of central government-owned enterprises is too high and technology-oriented OFDI takes a less proportion. Finally, the article puts forward the corresponding policy recommendations, and looking for the future.