Outward Foreign Direct Investment from China to ASEAN

Abstract

The paper combs the relevant theories of the determinants of foreign direct investment, using a gravity model for regression analysis, the determinants of China’s FDI in ASEAN were studied. Based on previous research and data availability, select relevant variables and use gravity model to establish China’s FDI flow to ASEAN and the ASEAN country’s market size, exchange rate, inflation rate, labor force, economic openness, infrastructure construction, Confucius Institute, China’s interest rate, the number of patents issued and the relationship between government support and the geographic distance between China and ASEAN, using panel data from 2003 to 2018, to test the serial autocorrelation of panel data, and perform regression analysis. Finally, based on the conclusion drawn from the above analysis, this paper puts forward relevant suggestions from both the government and enterprises perspectives on how to better promote foreign direct investment by Chinese enterprises in ASEAN.