Strategies for Managing China’s State-owned Foreign Direct Investment

Shuping Liao, Yongsheng Zhang
EABER Working Paper Series, No 76

China‘s state-owned enterprises (SOEs) and their overseas investment have
played an important role in China’s economic development. Nonetheless, the rapid
expansion of SOE-dominated overseas investment from China has also raised
concerns about so-called state capitalism, and several Western countries have objected
to some cases of overseas investment from China, proffering various excuses.
Meanwhile, the urgent need for both domestic market-oriented reform and the
transformation of China‘s development model has also raised new challenges for
China‘s overseas investment pattern. Domestically, China’s overseas investment
should promote its economic growth and the transformation of its development model
so as to best serve its national interest. Internationally, China’s overseas investment
should promote fair competition in the international markets, and make China’s
economic success a win-win situation with the rest of the world. These two objectives
are internally consistent. This paper aims to examine China’s overseas investment
from these two perspectives, and subsequently propose recommendations on how to
better manage China‘s SOE overseas investment.