Journal of China and International Relations (Dec 2014)

Red Trojan Horses? A New Look at Chinese SOEs' Outward Investment

  • Yang Jiang

Journal volume & issue
Vol. 2, no. 1
pp. 1 – 25

Abstract

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How dangerous is Chinese outward foreign direct investment (OFDI) because of the state's influence over business, particularly state-owned enterprises (SOEs)? To what extent are business and politics interwoven in Chinese investment decisions? Crucial knowledge is lacking on the relationship between the state and companies in China's OFDI. This study does not claim to completely refute the conventional view that Chinese companies, particularly SOEs, are controlled by the state in their OFDI activities. However, it tries to provide some evidence that suggests the need for a revised look at them. It argues that although Chinese SOEs are supported by Chinese diplomacy and loans in their OFDI and have a tacit understanding of certain strategic goals of the state, they enjoy autonomy to make business decisions and have prioritized maximizing their own business interests. Importantly, this is enabled by the state's view that the profit of SOEs is consistent with national interests.