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Abstract.  We investigate the empirical determinants of China's outward direct investment (ODI). It is found that China's investments in developed and developing countries are driven by different sets of factors. Subject to the differences between developed and developing countries, there is evidence that: (i) both market‐seeking and resource‐seeking motives drive China's ODI; (ii) Chinese exports to developing countries induce China's ODI; (iii) China's international reserves promote its ODI; and (iv) Chinese capital tends to agglomerate among developed economies but diversify among developing economies. Similar results are obtained using alternative ODI data. We do not find substantial evidence that China invests in African and oil‐producing countries mainly for their natural resources.

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China has become a capital-surplus economy and its overseas investment has grown apace. Although its outward investment is still small in absolute terms, especially compared to the huge inward flow, China's overseas enterprises have been quietly gaining importance as new sources of international capital. They are now globally diversified and involved in a wide variety of sectors, including banking, manufacturing and natural resource exploitation. In the coming years, Chinese outward investment is expected to accelerate. The free trade agreement signed between ASEAN and China will no doubt intensify Chinese outward investment to the region.

This dissertation elucidates the domestic politics of China's outward direct investments and its international implications. A current puzzle in CPE/IPE research is whether international investors from autocracies, particularly state-owned enterprises (SOEs), are profit- maximizing firms or agents of the state. Using formal analysis and two sets of original firm-level data on Chinese investments, I demonstrate that the behaviors of China's SOEs reflect both state preferences and firms' profit incentives and that the interaction of the two can lead to perverse outcomes unintended by the state : China's political elites depend on SOEs to carry out certain state objectives (e.g. energy security) and devise preferential policies (e.g. subsidies, insurance, bailouts) that enable firms to accomplish these objectives. SOEs, however, take advantage of these policy perquisites to seek rents. Knowing that the state will bail them out when investments fail, they take excessive risks when choosing host countries to earn high returns, ultimately passing on the cost of failed investments to the disenfranchised public. I apply this core insight to evaluate three aspects of China's approach to outbound investments: investment decisions by Chinese firms; the effect of Chinese investment on host country development and governance; and China's foreign policy toward economies that are the sites of its foreign investment

AbstractChina is currently the third largest country in terms of outward direct investment (ODI), with the investors mainly being state‐owned enterprises. This presents a question: What inhibits private enterprises from increasing ODI? Using a firm‐level panel data set for Zhejiang Province in China, we examine the impact of firm heterogeneity on private firm ODI. We have three main findings: first, a higher productivity level contributes to better access to ODI, and increases ODI value as well; second, lowering a firm's financial constraint level can increase both the probability and volume of ODI; third, productivity cannot offset the negative effect of financial constraint on private firm ODI.