Research On The Determinants Of The Chinese Enterprises Undertaking Foreign Direct Investment In The European Union

Starting from 2002 China's outward foreign direct investment(FDI)has shown a slow but steady growth.However,in recent years this growth has rapidly increased,thus it is important to study and understand the causes of China's increased foreign direct investment.Since2003,when China and the EU upgraded their relations to a comprehensive strategic partnership China's foreign direct investment directed to the EU started slowly to rise.China has already become EU's largest trading partner,and the EU has become China's major investment destination,second only to Hong Kong.The aim of this paper is to study the determinants of the Chinese enterprises undertaking foreign direct investment in the EU,as well as to provide additional information on this topic.For this purpose the present paper starts with a theoretical overview of the economic determinants for FDI.Then we provide summary statistics on the recent developments concerning the Chinese outward FDI towards the EU.Finally we test empirically the different motivations described in the theoretical part.In our empirical analyses we implement linear panel data models to a series of macroeconomic factors and John H.Dunning's taxonomy of FDI motives theory in order to further analyze China's foreign direct investment in the EU(28)for the period from 2003 to 2015.Our findings show that market-seeking and efficiency-seeking are the two most important motivations for Chinese enterprises investing in the EU countries.The motivation of these enterprises is to expand and to enter new markets,as well as to make use of EU's good infrastructure in order to decrease their transportation costs.