THE DETERMINANTS OF CHINA

HUA P.¹*
¹CERDI - UMR 6587, Université d'Auvergne, Ecole d'économie, CNRS, 65 Boulevard François Mitterrand - 63000 Clermont-Ferrand Cedex, France
* Corresponding Author : ping.hua@udamail.fr

Received : 01-12-2013     Accepted : 27-02-2014     Published : 28-03-2014
Volume : 5     Issue : 1       Pages : 238 - 243
Int J Econ Bus Model 5.1 (2014):238-243

Keywords : China, OFDI, Africa
Conflict of Interest : None declared

Using the panel data on 49 African countries over the period from 2003 to 2011, this paper estimated the determinants of China’s outward direct investments in Africa by employing the Hausman-Taylor method which controls the endogeneity of some variables. The results show that, as investors from developed countries, China’s OFDIs in Africa are attracted by marking-seeking and resource-seeking motives, tend to invest in the African countries having good macroeconomic performance and strong economic interaction with China. There is no evidence that China tends to invest in the countries having bad governance. Transaction cost is not an obstacle for Chinese investors. The results show moreover that the Chinese government’s policies of economic cooperation in Africa, of “China’s African Policy” and of the diversification of foreign exchange reserves explained 58% of the annual average growth rate of China’s investments in Africa. This marks the key difference with western investors.

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