|
|
|
|
|
ITM Master 1. Sem. |
|
China's Outbound FDI - Impediments |
|
Chinese policymakers and executives usually point to protectionism and high host-country entry barriers as the principal impediments to Chinese OFDI. Most OECD countries have regulatory mechanisms in place to prevent potentially harmful investments, and many governments have tightened investment rules in recent years, largely in response to the emergence of new investors from China and the Middle East. In theory such policies are legitimate measures for sovereign states to protect their national security interests and they should not be a serious concern for foreign investors provided that the offlimit sectors are clearly defined and the review process is transparent and nondiscriminatory. However, the reality in many countries does not meet the ideal: Investment protectionism is on the rise, investment rules are not very transparent, and review processes are politicized by domestic interest groups. China has borne the brunt of these suboptimal rules and politicized domestic debates, most prominently in the case of China National Offshore Oil Corporation’s (CNOOC) attempted takeover of the US oil firm Unocal in 2005. Recently heated debates with a strong political element have raged over Chinese investments in Australia (over a series of takeovers in the mining sector), in Korea (related to the bankruptcy of the automaker Ssangyong), in Russia (in reaction to the Baltic Pearl project), and in several developing countries. These examples illustrate that politicized investment regimes remain an issue for Chinese investors. Looking forward, it is likely that the changing nature of Chinese OFDI will result in a relative shift from traditional national security issues, such as investments in natural resources and critical infrastructure, to new areas, most importantly the acquisition of high-tech assets. National regulators will have to deal with more deals involving security-relevant technology transfer to Chinese companies such as Huawei’s bid for the US network manufacturer 3Com in 2007. This shift will also open new opportunities for domestic groups to politicize the debate, as some of the coming deals will also result in the reorganization of global value chains, including the transfer of jobs and technology to China. Main source: China’s Changing Outbound Foreign Direct Investment Profile: Drivers and Policy Implications by Daniel H. Rosen and Thilo Hanemann |
|
|
|
Contact:
Prof. Dr. Wolfgang Georg Arlt FRGS |
|
