ABSTRACT
We analyse the fundamental factors that are driving China’s outward FDI movement in this paper. The rising cost of doing business in China is a major reason, which includes rapidly increasing wage levels as a result of factor price equalization among trading nations, the skyrocketing real property prices in major cities, and the costs to catch up with paying for public goods that have been previously neglected. Other factors include corporate China’s expansion into upstream and downstream areas of the smiley-shaped GVC curve, changing consumer preferences and domestic industrial upgrade, and the large state-owned enterprises’ massive policy-driven overseas investments in the ‘One Belt One Road’ Initiative.
