Research on China’s government regulation on Outbound Foreign Direct Investment of Chinese companies\

The following is a figure of combination of Chinese companies’ OFDI flow data and three phases of the China’s government’s regulation.

2.1.1 Exploring and initial development phase (1979-1991)

During the early years of reform and opening-up, Chinese enterprises were lack of experience and the number of companies that invested abroad was relatively small, moreover, the country’s foreign exchange reserve was limited, therefore the government made strict control over investing abroad, only allowed some companies of central ministries grade and some province owned or municipality owned companies to invest abroad. With the development of Chinese multinational investment, the government began to reform

1 INTRODUCTION

With an increasing global economic integration, China’s government’s regulation for outbound foreign direct investment develops with the growth of the investment. China’s government intervenes and controls activities of multi-national companies when they invest abroad based on the laws within a frame of market mechanism, in order to revise market failure. China’s government’s regulation for outbound foreign direct investment includes three aspects: From the political aspect, it is the refection of the government’s political function and the objective requirement of the government’s economic function. From the economic aspect, it is an indispensable requirement of strengthen market and regime. From the social relationship aspect, it is the necessity for sustaining the normal development of social relationship that is created from OFDI.