Abstract
China’s “Going out Strategy” was initiated in the 1990s, which motivated the Chinese enterprises to extend oversea market, upgrade technologies, and obtain strategic resources. Since then, the Chinese outward foreign direct investment (OFDI) has grown significantly. Starting from the 11th Five-Year Plan, the Chinese government started to establish “Overseas Economic and Trade Cooperation Zones (OETCZs)” in resource-rich (human, raw materials, etc.) and logistically essential countries to attract domestic investors. After the 18th National Congress of the Chinese Communist Party (CCP), China furtherly announced the “One Belt One Road (OBOR)” Initiative, aiming to enhance infrastructure connectivity, deepen economic and trade cooperation, promote cultural exchange, and increase financial integration among China and the belt-road countries. OETCZs are more industrial and investment oriented while OBOR is a comprehensive strategy covering trade, investment, culture, politics, and other aspects. Although the OETCZs were established almost ten years earlier than the announcement of the OBOR initiative, many of them are located in the belt-road countries. Therefore, how the existing OETCZs affect China’s OFDI in the belt-road countries after the initiation of OBOR is the main focus in this study.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
See Huang (2016).
- 2.
The document is “Vision and Actions on Jointly Building Silk Road Economic Belt and 21st-Century Maritime Silk Road,” which is jointly issued by China’s National Development and Reform Commission, Ministry of Foreign Affairs, and Ministry of Commerce in March, 2015.
- 3.
See Liu et al. (2017).
- 4.
See Du and Zhang (2018).
- 5.
The thorough introduction of OETCZs is in Appendix 1.
- 6.
See Shen and Zhang (2016).
- 7.
We only use 17 OETCZs in our empirical analysis because Zambia-China Economic & Trade Cooperation Zone and China-Nigeria Economic & Trade Cooperation Zone do not belong to belt-road countries.Uzbekistan (Uzbekistan Pengsheng Industrial Park) is also dropped because of too many missing values.
- 8.
See for example, Dunning (1977).
- 9.
The Greater China region includes Hong Kong, Macao, and Taiwan.
- 10.
Although the number of countries located on the OBOR is greater than 60, many of them are less developed and missing lots of data. Hence, our data set only contains 43 countries.
- 11.
See Fung, Aminian, Fu, and Tung (2018).
- 12.
The definition of the orientation of each OETCZ used in our analysis is listed in Appendix 2.
- 13.
For example, the “Overseas Investment Industry Guidance Policy” was announced in 2006.
- 14.
A fixed effects (FE) model cannot be used since lndist in Eq. (6.1) is a time-invariant variable.
References
Buckley, P. J., Clegg, L. J., Cross, A., Liu, X., Voss, H., & Zheng, P. (2007). The Determinants of Chinese Outward Foreign Direct Investment. Journal of International Business Studies, 38(4), 499–518.
Chen, S., & Tan, H. (2012). Region Effects in the Internationalization–Performance Relationship in Chinese Firms. Journal of World Business, 47(1), 73–80.
Cheng, L. K. (2016). Three Questions on China’s ‘Belt and Road Initiative’. China Economic Review, 40, 309–313.
Cheung, Y. W. & Qian, X. (2009). Empirics of China’s Outward Direct Investment. Pacific Economic Review, 14, 312–341.
Du, J., & Zhang, Y. (2018). Does One Belt One Road Initiative Promote Chinese Overseas Direct Investment? China Economic Review, 47, 189–205.
Duanmu, J. L. (2012). Firm Heterogeneity and Location Choice of Chinese Multinational Enterprises (MNEs). Journal of World Business, 47(1), 64–72.
Dunning, J. H. (1977). Trade, Location of Economic Activity and the MNE: A Search for an Eclectic Approach. In B. Ohlin, P. O. Hesselborn, & P. M. Wijkman (Eds.), The International Allocation of Economic Activity. London: Palgrave Macmillan.
Fung, K. C., Aminian, N., Fu, X., & Tung, C. Y. (2018). Digital Silk Road, Silicon Valley and Connectivity. Journal of Chinese Economic and Business Studies, 16(3), 313–336.
Huang, Y. (2016). Understanding China’s Belt & Road Initiative: Motivation, Framework and Assessment. China Economic Review, 40, 314–321.
Kang, Y., & Jiang, F. (2012). FDI Location Choice of Chinese Multinationals in East and Southeast Asia: Traditional Economic Factors and Institutional Perspective. Journal of World Business, 47(1), 45–53.
Kolstad, I., & Wiig, A. (2012). What Determines Chinese Outward FDI? Journal of World Business, 47(1), 26–34.
Liu, H. Y., Tang, Y. K., Chen, X. L., & Poznanska, J. (2017). The Determinants of Chinese Outward FDI in Countries Along ‘One Belt One Road’. Emerging Markets Finance and Trade, 53(6), 1374–1387.
Ramasamy, B., Yeung, M., & Laforet, S. (2012). China’s Outward Foreign Direct Investment: Location Choice and Firm Ownership. Journal of World Business, 47(1), 17–25.
Shen, M., & Zhang, C. (2016). China’s Overseas Economic and Trade Cooperation Zones: The Productivity Cooperation Platform on the ‘Belt & Road Initiative’ (in Chinese). New Vision, 110–115.
Yu, H. (2017). Motivation Behind China’s ‘One Belt, One Road’ Initiatives and Establishment of the Asian Infrastructure Investment Bank. Journal of Contemporary China, 26(105), 353–368.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Appendices
Appendix 1
The Overall Introduction of China’s Overseas Economic and Trade Cooperation Zone (OETCZ)
According to the definition of the Ministry of Commerce of China, the Overseas Economic & Trade Cooperation Zone refers to an industrial park invested and constructed by an independent corporate body with Chinese investment established outside of China. These corporate bodies are established by Chinese-shareholding enterprises registered in China with an independent legal personality. The purpose of its establishment is to attract Chinese enterprises to invest and construct factories in the cooperating countries, in order to support the enterprises’ overseas development, and to establish mutually beneficial cooperative relationships with other countries. According to the Ministry of Commerce of China, there were 20 cooperation zones officially confirmed and recognized by the Ministry of Commerce by the end of 2018.
In terms of industry selection, most of the Overseas Economic and Trade Cooperation Zones focus on China’s dominant industries such as home appliances, textiles, machinery, electronics, and so on. The building materials industry with excess capacity is also listed in the important development projects of several Overseas Economic and Trade Cooperation Zones. In addition, the development of the industrial park also reflects the local resources and characteristics. For example, the Economic and Trade Cooperation Zone in Southeast Asia mainly leverages local labor advantages to develop textile, home appliances, machinery and electronics, and other labor-intensive industries. Africa is rich in mineral resources, so the Eastern Industry Zone of Ethiopia is characterized by metallurgy. As for China European Trade & Logistics Cooperation Zone in Hungary, the geographical advantage has helped develop commerce and logistics as the focus of the Zone.
In terms of geographical location, most of China’s Overseas Economic and Trade Cooperation Zone is in line with the “One Belt One Road” Initiative. Among the 20 Overseas Economic and Trade Cooperation Zones currently confirmed by the Ministry of Commerce of China, only the “Zambia-China Economic & Trade Cooperation Zone” and the “China-Nigeria Economic &Trade Cooperation Zone” are outside of the “One Belt One Road” Initiative strategic layout. A total of nine Overseas Economic and Trade Cooperation Zones are located in Cambodia, Thailand, Laos, Indonesia, Vietnam, Ethiopia, Egypt (Suez), all along the “21st Century Maritime Silk Road.” The other nine Overseas Economic and Trade Cooperation Zones are located in Russia, Kyrgyzstan, Pakistan, Uzbekistan, and Hungary, all along the “Silk Road Economic Belt.”
Appendix 2
Rights and permissions
Copyright information
© 2019 The Author(s)
About this chapter
Cite this chapter
Tung, C.Y., Wen, FI. (2019). China’s Investment in Belt and Road Countries: An Industrial Perspective. In: Syed, J., Ying, YH. (eds) China’s Belt and Road Initiative in a Global Context. Palgrave Macmillan Asian Business Series. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-14722-8_6
Download citation
DOI: https://doi.org/10.1007/978-3-030-14722-8_6
Published:
Publisher Name: Palgrave Macmillan, Cham
Print ISBN: 978-3-030-14721-1
Online ISBN: 978-3-030-14722-8
eBook Packages: Business and ManagementBusiness and Management (R0)