Tuesday 28 July 2009

Is China investing abraod to secure natural resouces?

There is considerable anecdotal evidence that China is in a "land grab" race in Africa and elsewhere to secure natural resources for its continuing economic growth.

However a recent paper in Pacific Economic Review casts doubt on this conclusion.

The abstract is somewhat contradictory - is China investing in for natural resources or not. It is a shame the abstract does not make this clearer.

Yin-Wong Cheung*1 and Xingwang Qian 2


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.


1 comment:

Unknown said...

EAFE Pro wrote a great article on China's recent surge in buying aluminum and copper.