China's outward foreign direct investment (OFDI) to developing countries: the case of Central and Eastern Europe (CEE)

China's outward FDI reached a peak in 2016, making it as important a foreign investor as Germany, France and the United Kingdom. In this paper, we investigate the main motivations behind Chinese investments in developing countries, Central and Eastern Europe (CEE) in particular. Although the size of Chinese investment in CEE is small, the region is strategic for China as it is a gateway into Western Europe under the Belt Road Initiative. As new or future members of the EU, the CEE countries also provide access to the single market. We find that the motivations to invest in developing countries differ according to regions. Based on outward FDI data provided by the Chinese authorities, the number of Chinese FDI greenfield and M&A projects fromFinancial TimesandZephyrrespectively, as well as face-to-face interviews with companies with investments in CEE, we find that for the case of CEE, domestic markets, access to the larger EU market, strategic assets like technology and prior relationship with the CEE are main reasons for investing.

Automated summary

China's outward FDI reached its peak in 2016, placing it on par with Germany, France, and the United Kingdom as a significant foreign investor. In this study, the main motivations behind Chinese investments in developing countries, particularly Central and Eastern Europe (CEE), are investigated. Although the size of Chinese investment in CEE is relatively small, it holds strategic importance for China as it serves as a gateway into Western Europe under the Belt Road Initiative. As emerging or potential members of the EU, the CEE countries also offer access to the single market. The findings reveal that motivations for investing in developing countries vary across regions, and for CEE, the main reasons include domestic markets, access to the larger EU market, strategic assets such as technology, and pre-existing relationships.