Challenges for China's outward FDI

Since China adopted its "going out" policy in 2001, its outward foreign direct investment flows have grown rapidly, reaching $84 billion in 2012 (although the stock remains small). That year, China was the world's third-largest outward investor, after the United States and Japan.

This performance raises all sorts of issues, especially because State-holding enterprises control some three-quarters of the country's OFDI stock.

A short-term challenge for China's government is to consider what to do regarding the growing skepticism in some host countries about the country's OFDI. It is motivated partly by the usual difficulty of accommodating new competitors, concerns about national security and concerns about the impact of Chinese OFDI projects, even though this impact may not be that different from that of companies from other countries.