International Political Economy of Chinese Outward Foreign Direct Investment

This book centers on the political economy behind the internationalization of Chinese multinational enterprises (MNEs). Special attention has been given to the role of political-sided considerations and state policies in their investment strategies during the “stable period” (2006 to 2017) when Chinese Outward Foreign Direct Investment (OFDI) witnessed substantial growth, even as the entire world was relatively friendly towards Chinese MNEs. The author uses scientific methods to develop Country Political Risk Index (CPRI)—the first composite index that captures how Chinese MNEs perceive political risk in host countries when making investment decisions, applies it to China Global Investment Tracker (CGIT) dataset developed by American Enterprise Institute (AEI) and interprets the reasons behind the political risk distribution of Chinese OFDI from the standpoint of China’s holistic approach to national security. Offering by a young scholar with practical experience in business consultancy and M&A projects, this book can help researchers, diplomats and business people better understand how China’s FDI-related policies empowered Chinese MNEs to venture overseas and emboldened them in the face of unstable investment environments.

“China is one of the leading global investors. The author’s analysis of how unstable political environments in host countries influence the volume, direction and nature of investments of such a global player is of undoubted scientific and practical interest to academics, businessmen and politicians in both China and its economic partners.” (Alexcander Lukin, professor, faculty of world economy and international affairs, HSE University)

“The author devotes himself to a very cutting-edged problem, and he blends his theoretical research well with his field research, which makes his work more comprehensive and practice-oriented.” (Shaolei Feng, professor, Center for Russian studies, East China Normal University)

“Country Political Risk Index (CPRI) is an important contribution, whether for theoretical research or practical activities of multinationals, think tanks, government bodies and consulting institutions.” (Shuhua Zhang, senior research fellow, professor, Institute of Political Science, Chinese Academy of Social Sciences)

“The author’s work is a testament to his meticulous approach in dissecting the complex interplay between political volatility in host countries and China's outward foreign direct investment (OFDI). By integrating a multidisciplinary perspective that encompasses political science, econometrics and international relations, the author has crafted a narrative that is not only academically rigorous but also highly relevant to the current global investment climate. The insights gleaned from this study are particularly timely, given the increasing salience of geopolitical dynamics in shaping the strategic decisions of Chinese investors.” (Huasheng Zhao, emeritus professor, Center for Russian and Central Asian Studies, Institute of International Studies, Fudan University)

“In the context of escalating geopolitical tensions, political considerations have increasingly overshadowed economic ones in our globalized era. It is thus intriguing to explore the impact of political factors on China's economic policy. The author's methodology in addressing this issue is pioneering, and his findings are not only pragmatic but also offer valuable insights for policy formulation.” (Jun Liu, professor, School of Politics and International Relations, East China Normal University)

“The author endeavors to systematically elucidate China's policies on outward foreign direct investment (FDI) through the lens of national security and introduces the innovative concept of a "protection system for Chinese enterprises' overseas investment interests”. This scholarly work substantiates his efforts as notably successful, contributing to the discourse on the strategic management of China's global economic engagements.” (Kun Zhai, professor, School of International Studies, Peking University)

“Drawing upon empirical insights from the ‘Chinese government's experiences’ and the ‘operational practices of Chinese multinational corporations’, the author contributes to the theoretical discourse of International Political Economy (IPE). His analysis, which addresses the pivotal question of ‘how state policies can catalyze the international expansion of transnational enterprises’, significantly extends the frontiers of IPE as an evolving interdisciplinary domain.” (Dongsheng Di, professor, School of International studies, Renmin University of China)

“This scholarly work introduces an innovative index for host country risk assessment, specifically tailored to analyze the investment patterns of Chinese multinational enterprises (MNEs) within the ambit of the Belt and Road Initiative (BRI). It challenges the prevalent yet misguided notion that Chinese MNEs, in their overseas investments, disregard the political risks inherent in host nations, merely aligning with the strategic directives of the Chinese government. This book not only helps us to re-examine the decision-making of Chinese MNEs under China's political-economic system, but also deepens the knowledge of the relationship between enterprises and the government in International Political Economy (IPE) literature.” (Feiteng Zhong, senior research fellow, professor, National Institute for International Strategy, Chinese Academy of Social Sciences)

Qiuyu GaoYan, PhD in Political Science (HSE University) is assistant professor and Chenhui research fellow at Center for Russian studies, School of Politics and International Relations, East China Normal University. A young expert on geopolitical risk analysis, Chinese multinationals, China’s political development and China-Russia relations, he contributes to policy recommendations and consults for Chinese and foreign MNEs. Dr.GaoYan received bachelor’s and joint-master’s degrees from Wuhan University, University of St.Andrews and MGIMO University.