An Explanatory Study of Bilateral FDI Relations: The Case of China

A bilateral FDI relationship should include two dimensions, size and intensity. This study explores the factors that contribute to an explanation of both the size and the intensity of bilateral FDI relations, using the case of China. The results suggest that the countries, which are geographically, politically, ethnically, and economically close to China, have a firm intention of investing in China and enjoy a high FDI intensity. The countries with a large market, high productivity and an advanced structure are capable of investing more in China, and they enjoy a higher FDI value than other countries. The two factors, the overseas Chinese and the distance from China, are significant influences on both the size and the intensity of the FDI relationship.