China's outward foreign direct investment (OFDI) to developing countries: the case of Central and Eastern Europe (CEE)

• Published in: Journal of the Asia Pacific economy Vol. 27; no. 1; pp. 124 - 146
• Main Authors: Ramasamy, Bala, Yeung, Matthew
• Format: Journal Article
• Language: English
• Published: London Routledge 02.01.2022; Routledge, Taylor & Francis Group
• Subjects: Access; Central and Eastern Europe; China; Developing countries; Domestic markets; Foreign investment; LDCs; Markets; Outward FDI; Single market; Technology; Eastern Europe; China
• ISSN: 1354-7860; 1469-9648
• DOI: 10.1080/13547860.2020.1790182

China's outward FDI reached a peak in 2016, making it as important a foreign investor as Germany, France and the United Kingdom. In this paper, we investigate the main motivations behind Chinese investments in developing countries, Central and Eastern Europe (CEE) in particular. Although the size of Chinese investment in CEE is small, the region is strategic for China as it is a gateway into Western Europe under the Belt Road Initiative. As new or future members of the EU, the CEE countries also provide access to the single market. We find that the motivations to invest in developing countries differ according to regions. Based on outward FDI data provided by the Chinese authorities, the number of Chinese FDI greenfield and M&A projects from Financial Times and Zephyr respectively, as well as face-to-face interviews with companies with investments in CEE, we find that for the case of CEE, domestic markets, access to the larger EU market, strategic assets like technology and prior relationship with the CEE are main reasons for investing.