Shuping Liao a and Yongsheng Zhang

Strategic Development Department, Bank of China, Beijing, China; b Development Research Center of the State Council, Beijing, China

(Received 6 November 2013; accepted 21 November 2013)

Chinese state-owned enterprises (SOEs) and their overseas direct investment (ODI) have played an important role in China’s economic development. But the rapid expansion of SOE-dominated ODI has also raised concerns, including about state capitalism and the need for competitive neutrality. This paper considers China’s strategy for managing ODI by its SOEs given a changing context. On the one hand, the Chinese economy is rapidly growing and will soon become the largest economy in the world. China’s role in the world, as well as its global responsibility, is therefore changing. China needs to establish a win-win and harmonious relationship with the rest of the world, and ODI has a role to play in this. On the other hand, China’s growth model is shifting to become greener, more balanced, and innovation-driven. China’s changing international role and the changing growth model have created new impera-tives for, and constraints on, ODI by SOEs and reforms to SOEs. This paper aims to examine ODI by Chinese SOEs from the two dimensions of China’s changing role and growth model. It discusses strategies for better managing ODI by Chinese SOEs in the new context that is emerging.

Keywords: China’s overseas investment; state-owned enterprises (SOEs); strategic adjustment; changing role; green growth

JEL codes: F21; L21; O53

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