What Determines Chinese Overseas Investments?

In recent decades,the rapid surge of China's direct overseas investments was observed.This thesis tries to identify the factors which affect the Chinese investorrs' decisions.Besides some traditional variables,such as international trade,the economic characteristics of host countries,and the physical distance,we consider some additional variables,including whether the host countries share the same language with China,and whether the host country is a member of "One belt-one road" development strategy.In our analysis we consider the country-level panel data about the Chinese FDI(Foreign Direct Investments)flows into two subsets of countries—developing and developed-which have been observed consecutively for the period 2004-2014.We have considered an ordinary least squares regression,fixed effect panel data model and a random effect panel data model,and have found that for both datasets the fixed effect model might be preferred by conducting a Hausman test.Our key findings reveal the dominance of the economic characteristics of host countries over other explanatory variables,such as location,language or contiguity in explaining FDI flows.Particularly,in case of developing countries,recipient country's GDP was found significant in explaining FDI flows,indicating that China tends to invest in developing countries with higher GDP.The opposite tendency was revealed regarding developed countries:the trade in,dicator-China's import from the host economies-was found statistically significant,indicating that settled trade relations with a country attract more investment projects there.No evidence of significance of the membership in the program "One country-one belt" was found.This might be due to the fact that recent implementation of the program has not accumulated sufficient influence yet.