Puja Silwal

Author: Puja Silwal

 Expert Commentary 

"FDI Outward Policy of China: An Initiation for Shared Development"

by Business and Investment Lawyer Puja Silwal

With the rapid development of economic in the China, China was able to attract the largest FDI into the China by which in the year 2012, China was one of the world’s largest recipients of FDI. Gradually, China opts for the two-way process of the investment with the Belt and Road Initiative as a mean for the China’s outward foreign direct Investment (OFDI) (1). As per the Outward Foreign Direct Investment (OFDI) China (2) rank 4^th in the number and growth is expected to grow continuously coming year. China's biggest SOE companies like Huwai, and China Telecommunication. China ODI has peaked to the $180 billion outside the country which has been increasing every year (3). FDI has impacted China in many which includes raising GDP growth, increasing productivity, indirectly contributing to domestic enterprise, and creating of dynamic manufacturing sector (4)

China started its outward foreign direct investment after the reform and opening up. China later at the 2000’s only implemented going out policy as the enterprise competitiveness and support institutional framework (5). This idea initially was to balance the trade but later came strongly as a initiation which helped the countries to regain the development even at the time of economic crisis. In starting the. China’s outward FDI inflow faced the difficulty facing losses but later it has undoubtedly proved the outward FDI has become the unique initiation for the shared development. 

The unique idea for the shared investment and initiation can be a great example for the development in collective manner which world strive at present. Some of the unique character that China outward FDI has is its equal geographical distribution, specific areas for the investment including trade, extraction, processing, manufacturing, transport, communication. 

Development and growth in African state reflect the true idea of collectivism with the shared interest and win-win cooperation. China introduced a legal framework and business environment that were more transparent and laws were amended based on the needs of the time. China even launched a program to restructure and reduce state ownership (6).  Such, outward policy also supports Nepal, as the neighbor relation and various growth opportunity in Nepal, China has increasing its outward investment in Nepal. Encouraging FDI has  also been a longstanding top priority for the Nepalese government. Collective work and development in the area of the manufacturing and production sector will only enhance the current situation of Nepal for which the concept of the shared development within the Outward FDI is must (7). Both countries upon the understanding of the need and desire if make investment then, can bring collective cooperation and win-win situation. 

(1) Kaiwen Liu, "Outward Foreign Direct Investment from China to ASEAN," Economic and Social Development, International Scientific Conference on Economic and Social Development 59 (2020): 35-42. 

(2) Wei Tian, Miaojie Yu, Outward Foreign Direct Investment of Chinese Enterprises, Springer, 2022.

(3) Will Kenton, Outward Direct Investment, available at https://www.investopedia.com/terms/o/outward_direct_investment.asp, accessed on 12 Oct, 2024.

(4) Wanda Tseng and Harm Zebregs, IMF Policy Discussion Paper, Foreign Direct Investment in China: some Lessons for Other Countries, IMF, (2002). 

(5) Zhang Hong, China’s Outward Foreign Direct Investment: Theories and Strategies, Enrich Professional Publishing Inc, 2015, China.

(6) OECD, Main Determinants and Impacts of Foreign Direct Investment on China's Economy, OECD Working Papers on International Investment, OECD Publishing. (2000) available  http://dx.doi.org/10.1787/321677880185 (last visited on 20 March 2024).

(7) Pratikshya  Dahal, Rethinking the Ban on Outward Foreign Investment for Nepali Business, Legal Eagle, Business 360, available at https://www.b360nepal.com/detail/22870/rethinking-the-ban-on-outward-foreign-investment-for-nepali-businesses-2024-Jun-30-611200 and Unveiling Outward Investment: A Nepali Law Perspective, Legal Eagle, Business 360, Sep 27, 2024, available at https://www.b360nepal.com/detail/23525/unveiling-outward-investment-a-nepali-law-perspective-2024-Sep-27-637000.