China's outward FDI and bank performance

Abstract

Since the 1980s, globalization has led to a rapid increase in the growth of foreign direct investment (FDI). throughout the world. Along with FDI inflow, China's outward direct investment increased gradually after 1978. By the end of 2010, nearly 13,000 domestic investing entities had established about 13,500 overseas enterprises across different industries, spread across 177 countries globally. Strong growth in outward FDI has led to extensive research investigating outward FDI issues, for developed economies, these studies typically employed cross-section, time-series or panel data analysis. Despite this considerable research investigating the experience of developed countries outward FDI - China's outward investment has attracted little attention from scholars in mainstream research publications. This lacuna in researching outward FDI from one of the most important participants in global outward FDI, accounting for 17% Global outward FDI in 2011 creates a vacuum in understanding recent Global trends in outward FDI. In particular, existing theory does not fully explain this investment pattern from China. One motivation therefore behind this thesis is to investigate the factors driving China's investment from both an economic and strategic background. Coincidently, this thesis investigates the existence of potential links between China's outward FDI growth and China's banks performance. International expansion of China's banking sector increased along with China's overseas investment since Chinese enterprises investment abroad requires funding support from banks which is one of the most important motivations for China's banks "go abroad" strategy. This thesis is structured into two parts: Part I provides an analysis of China's outward FDI while Part II provides an in-depth empirical study of the performance of China's banking sector relative to the period of growth in outward FDI discussed in Part I. The thesis is structured as follows: Chapter 2 provides a detailed discussion of China's FDI policy framework over a period of rapid growth in China's outward FDI. Chapter 3 provides an empirical analysis of China's outward FDI across countries including literature review of FDI. Part II of the thesis includes an analysis of the consequences of China's financial outward FDI for China's bank performance (Chapters 4-6) and a final chapter (Chapter 7) provides a summary and conclusions.

Date of Award	2013
Original language	English