The impact of third-country effects and economic integration on China's outward FDI

The study employs a spatial econometric model to explore the impact of third-country effects and economic integration on China's outward FDI (OFDI). The results show that the pattern of China's OFDI tends toward a complex FDI without third-country effects. The degree of economic integration and host country's political risk both have a negative influence on China's OFDI. Furthermore, greater cultural proximity between China and the host country, as well as greater per capita income (market size), both have significant benefits to China's OFDI. The host country's market opportunity has a significant negative effect on China's OFDI.

Research highlights► China's OFDI is a complex FDI without third-country effects. ► The economic integration and political risk both have a negative effect. ► The host country's market opportunity has a negative effect. ► Asia's cultural proximity is also in harmony with China's OFDI preferences.