JSPES, Vol. 42, No. 3-4 (Fall-Winter 2017)
pp. 327–367

An Analysis of Chinese Outward Foreign Direct Investment in Emerging and Developing Countries: Implications for Pakistan under CPEC

Muhammad Zubair Mumtaz
Zachary Alexander Smith
Ashfaque H. Khan

Over the past fifteen years, Chinese investors explored their international business opportunities. Over this time period their investment flows moved from developed to developing and emerging economies. This study analyzes the Chinese outward foreign direct investment (OFDI) deployed in twenty-five emerging and developing countries during the 2009 to 2014 period. On the basis of OFDI statistics, it seems as though all of the Chinese investment projects that we explored have been successful. This study examines the determinants of Chinese OFDI using panel data analysis and finds that the size of the economy, market opportunities, cost advantages, country risk, and geographical proximity are the main factors that influence Chinese investment in emerging and developing countries. In addition, this study finds that there are significant regional differences in the determinates of Chinese OFDI. The results of panel analysis on the selected Asian countries including Pakistan suggest that market opportunities, wage differentials, and geographic distance are robust variables. This study also discusses the perceived benefits obtained from the formulation of the CPEC project, policy recommendations for the implementation of the CPEC, and issues and challenges related to the CPEC project.