How Does Chinese Investment Abroad Affect Export Performance in Recipient Countries?

This paper deviates out from previous research done on Chinese ODI by focusing on the industry level impact of Chinese investments on exports. The determinants of Chinese ODI have become largely recognized, and the linkage between ODI and economic growth is generally accepted in economic theory. What is largely uncovered is how sector specific ODI impacts exports in that sector for the recipient country, and how this relationship manifests itself with the most up to date Chinese investment data. There is currently no economic theory to link export gains to this type of highly localized investment. The hypothesis proposed by this paper is that China’s ODI brings new technology to the recipient countries, which through technological spillover leads to increased industry efficiency and thus increased exports. The expected results are that Chinese investment will be positively correlated with increased exports.