From World Factory to Global Investor: A Multi-Perspective Analysis of China’s Outward Direct Investment

300 Pages·2017·3.757 MB·English

by  Xuedong Ding, Chen Meng

‘Over the last decade, China rapidly became a major player in global investment.
In recent years, China’s Outward Direct Investment (ODI) already surpassed its
inward Foreign Direct Investment (FDI). Against this background, the editors of
this volume, both from China Investment Corporation, China’s sovereign wealth
fund established a decade ago, assembled an impressive and diversifi ed group of
more than 30 academics, policy makers, business consultants and investment pro-
fessionals from inside and outside China to contribute to a wide range of analysis
on China’s ODI. The result is a timely and valuable book, which in my view will
benefi t those who want to understand the economic, business and investment
logic of the rise of China’s ODI, to interpret related government policies, and to
think about its global implications’.
Yingyi Qian, Professor and Dean, School of Economics and
Management, Tsinghua University
‘This book provides a valuable examination of China’s emergence as a global
economic powerhouse – from a global manufacturing hub to a global investor.
It details, from a variety of perspectives, the shifting focus of Chinese overseas
investment, including the role of state and private entities, the consequences for
rebalancing of China’s domestic patterns of growth, and the experiences of a vari-
ety of Chinese fi rms and entrepreneurs. These are understudied areas that warrant
much more attention. From World Factory to Global Investor is an important contri-
bution. It provides a window into China today and an important dimension of its
likely future economic priorities’.
Merit E. Janow, Dean, School of International and Public Affairs,
Professor of Practice, International Economic Law &
International Affairs, Columbia University
‘In the past few decades, China has successfully transformed itself from a capital-
shortage economy to one of the largest global investors. Today, as the world’s
second largest economy and the largest trading nation, China’s economic infl uence
has reached every corner of the globe. China has made and continues to make
great contributions to the world economy, yet the country is often misperceived
and misinterpreted as new colonialism and imperialism. How has China risen to
a world economic power, and how is China changing the world economy? From
World Factory to Global Investor provides a most authoritative account of China’s
miracle by focusing on China’s outward direct investment. Written by most pres-
tigious scholars in their fi eld, all the chapters are equally strong and solid. All who
are interested in the current and future role of China in the world economy should
read this excellent book.’
Zheng Yongnian, Professor and Director of East Asian Institute,
National University of Singapore

FROM WORLD FACTORY
TO GLOBAL INVESTOR
Chinese outward direct investment (ODI) has been growing rapidly in recent years.
As an important phenomenon in the global economy, China’s ODI deserves more
thorough analysis. This book looks at China’s ODI activities from multiple per-
spectives. With the rebalancing of China’s own structural growth and China’s shift
towards a net capital exporter, her initiatives such as ‘One Belt One Road’ (OBOR)
have had profound implications on the traditional super-sovereign or multilateral
fi nancial and investment cooperation mechanism. As China’s investment destina-
tions and investment methods become more diversifi ed and sophisticated, this
book offers unique and refreshing insight into China’s ODI activities.
The book covers the whole range of history and policy development of China’s
ODI and analyses China’s ODI trends and characteristics in recent years. It reviews
China’s major policy changes after the Third Plenary Session of the 18th Central
Committee of the Communist Party and how they may impact China’s ODI strat-
egy and activities. The book addresses potential challenges and risks of rising ODI
activities from practitioners’ perspective, and it discusses how recipient countries
may react and respond to the surge of Chinese capital. The book also offers policy
implications and a future research agenda in relation to the Chinese investments.
Xuedong Ding is Chairman and CEO of China Investment Corporation (CIC).
Prior to this, he was Deputy Secretary General of the State Council and has held
several positions in the Ministry of Finance, including Vice Minister and Assistant
Minister. He recently published Incentives for Innovation in China: Building an Inno-
vative Economy with Routledge in 2015.
Chen Meng is Director at China Investment Corporation (CIC) and Visiting
Scholar at Leeds University Business School (LUBS), UK, and University of Inter-
national Business and Economics, Beijing. He previously held senior positions in
venture capital businesses in China and the UK. He started his career as Lecturer
in Chinese Business and Economy at LUBS. He published Multinational Banking in
China: Theory and Practice with Edward Elgar in 2009.

FROM WORLD FACTORY
TO GLOBAL INVESTOR
A Multi-Perspective Analysis of
China’s Outward Direct Investment
Edited by Xuedong Ding and Chen Meng
First published 2018
by Routledge
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and by Routledge
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Routledge is an imprint of the Taylor and Francis Group, an informa business
© 2018 selection and editorial matter, Xuedong Ding and Chen Meng;
individual chapters, the contributors
The right of Xuedong Ding and Chen Meng to be identifi ed as the
authors of the editorial material, and of the authors for their individual
chapters, has been asserted in accordance with sections 77 and 78 of the
Copyright, Designs and Patents Act 1988.
All rights reserved. No part of this book may be reprinted or reproduced
or utilised in any form or by any electronic, mechanical, or other
means, now known or hereafter invented, including photocopying and
recording, or in any information storage or retrieval system, without
permission in writing from the publishers.
Trademark notice : Product or corporate names may be trademarks or
registered trademarks, and are used only for identifi cation and explanation
without intent to infringe.
British Library Cataloguing-in-Publication Data
A catalogue record for this book is available from the British Library
Library of Congress Cataloging-in-Publication Data
Names: Ding, Xuedong, 1960– editor. |
Meng, Chen, 1978 November 14– editor.
Title: From world factory to global investor : a multi-perspective
analysis of China’s outward direct investment /
edited by Xuedong Ding and Chen Meng.
Description: First Edition. | New York : Routledge, 2018. |
Includes bibliographical references and index.
Identifi ers: LCCN 2017036610| ISBN 9781138210233 (hardback) |
ISBN 9781138210240 (pbk.) | ISBN 9781315455815 (ebook)
Subjects: LCSH: Investments, Chinese. |
Corporations, Chinese—Law and legislation—Foreign countries. |
International business enterprises. | International fi nance.
Classifi cation: LCC HG4538 .F76 2018 | DDC 332.67/351—dc23
LC record available at https://lccn.loc.gov/2017036610
ISBN: 978-1-138-21023-3 (hbk)
ISBN: 978-1-138-21024-0 (pbk)
ISBN: 978-1-315-45581-5 (ebk)
Typeset in Bembo
by Apex CoVantage, LLC
CONTENTS
List of fi gures x
List of tables xii
Foreword by Michael Spence xiii
Foreword by Justin Yifu Lin xvi
Acknowledgements xviii
List of contributors xix
Abbreviations xxii
Introduction and overview 1
PART I
Review of Chinese outward direct investment 5
1 Outward direct investment by Chinese enterprises: a survey
(2005–2016) 7
Chen Meng, Zhihua Lyu and Chunyang Jiang
2 From ‘World Factory’ to international capacity cooperation:
China’s evolving role in the global value chain 23
Xuedong Ding
3 China’s economic transition and outward direct investments 33
Lawrence J. Lau
viii Contents
4 Challenges in GVC and ODI development: what can China do? 46
Jiong Gong, Xinding Yu and Zhongxiu Zhao
5 Chinese outward foreign direct investment – an opportunity
to revisit international business theory 60
Peter J. Buckley
PART II
Policy development and implications 69
6 Recent changes in China’s outbound investment policies
and their implications 71
Zucai Hu
7 China builds up free trade areas to facilitate OFDI 79
Xiangchen Zhang
8 Asian Infrastructure Investment Bank (AIIB): a new
mechanism for global fi nancial cooperation 87
Yaobin Shi
9 RMB internationalization: history and outlook 94
Jun Ma and Huaizhu Xie
10 Japan’s experience of foreign investment and
China’s policy options 109
Wenling Chen and Guanqun Mei
PART III
The dynamics of Chinese ODI 121
11 From active buyers to active owners 123
Gordon Orr and David Cogman
12 Execution is the strategy: The key to Lenovo’s success in
IBM PC division acquisition 137
Chuanzhi Liu and Neng Liang
13 Why go global? The logic behind investing overseas 156
John Zhao
Contents ix
14 The dynamics of Chinese outbound investment –
challenges and case studies 163
Andrew Wood and Yu Cao
15 Capitalizing on opportunities and tackling major legal
challenges and risks: a practitioner’s perspective 177
Joseph C. Shenker, Chun Wei and Jordan H. Oreck
PART IV
Chinese ODI in a global context 189
16 Policy implications of FDI on fi nancial sector development 191
Andrew Sheng
17 The history and evolution of Chinese companies going global:
what to expect in the years ahead 205
Yibing Wu
18 Chinese investment in the UK: great expectations? 216
Lord Sassoon and Giles Blackburne
19 The ‘New Normal’ and its implications for Chinese
investment in Africa 232
Jacko J. H. Maree and Jeremy J. Stevens
20 The return of bilateralism: China, post-Brexit Britain
and Trump 243
Erik Berglof and Vince Cable
PART V
Conclusion 255
21 Summary and conclusions 257
Xuedong Ding and Chen Meng
Index 267