《《China#39;s Outward Direct Investment and Its Oil Quest》.pdf

China’s Outward Direct Investment and Its Oil Quest* Xingwang Qian SUNY, Buffalo State College This Version: January 2011 * Qian acknowledges the financial support from the Dean of School of Natural and Social Science at Buffalo State. We thank Lauren Malone, Shu Yu, and participants of the 2010 CESifo Venice Summer Institution Workshop for their helpful comments and suggestions. Xingwang Qian, Economics and Finance Department, SUNY Buffalo State, Buffalo, NY 14222, USA. Phone: (716) 878 6031. Fax: (716) 878 6907, Email: qianx@ China’s Outward Direct Investment and Its Oil Quest ABSTRACT We investigate the empirical determinants of China’s outward direct investment (ODI) in conventional oil producing countries. Using China’s approved ODI data and a new ODI data set in the OECD-IMF standard, we find that China’s ODI seeks foreign markets and is averse to political risks. Interestingly, corruption attracts investments from China. We also find that China’s reliance on imported oil pushes and the “going global” policy promotes China’s ODI to quest for more foreign oil. A host country’s energy output does not affect its probability of receiving China’s investment. However, after China decides to invest, it tends to invest more in oil countries with a relatively high level of energy output. Subject to the different investment strategies that China implements, the behavior of China’s ODI in the Middle East, Africa, and other oil producing countries is different. While China’s ODI has put more weight on Africa and other oil nations, it has reduced its degree of reliance on the Middle East area. Nevertheless, the Middle East remains China’s main source of imported oil. JEL Classification: F21, F36, O53 Keywords: China’s outward direct investment, oil quest, going global, corru