China's Changing Outbound Foreign Direct Investment Profile: Drivers and Policy Implications

After decades of negligible outbound foreign direct investment (FDI), Chinese firms' outbound investment has reached significant levels in recent years, challenging international investment norms and affecting international relations. But China's outflows are poorly understood. Seen in context, China is a laggard in global investment, and the country faces numerous internal impediments to overcoming this disadvantaged position. Daniel H. Rosen and Thilo Hanemann review the data behind China's growing outbound investment, consider the commercial and political forces driving this growth, and analyze both foreign and domestic obstacles for Chinese overseas investors. While extensive media coverage has provoked worries that Chinese firms are buying up the world, China remains a relatively minor global investor compared with OECD countries. China's net FDI position remains negative, with $5 of FDI assets under foreign ownership in China for every$1 of Chinese direct investment assets abroad. But China's efforts to rebalance its economic growth and make the shift toward higher value-added economic activity will increasingly force Chinese firms to invest abroad. Government policy has evolved in recent years to encourage and support China's firms to look abroad. Investment regimes in host countries are one obstacle to Chinese outbound FDI, but China's firms are even more impeded by home-made problems, including the parochial executive leadership and a dearth of key management skills needed to operate successfully overseas. Rosen and Hanemann argue that the growing volume and changing nature of China's outbound investment have important implications for policymakers in host countries. Host country governments must clarify their policies and draw a clearer line between legitimate national security reviews and protectionist economic competitiveness impulses disguised as security concerns. The lack of data transparency contributes to the poor understanding of China's outbound investment, and these inadequacies must be corrected if China and investment incumbents are to work together optimally. In addition, given its disadvantaged FDI starting position China should be expected to pull considerable weight to preserve and promote an open international investment environment, including by maintaining openness at home. If China converges upward to OECD outbound investment levels rather than incumbent leaders trimming down to historic Chinese levels due to protectionism, then future flows coming from China can contribute positively to a range of international issues, from financial crisis recovery to mitigating climate change.

It Should Be a Breeze: Harnessing the Potential of Open Trade and Investment Flows in the Wind Energy Industry

This working paper maps out the structure and value chains of the wind industry, analyzes the wind industry's increasing global integration via cross-border trade and investment flows, and offers recommendations to policymakers for the design of investment and trade policies to help realize wind energy's potential. We find that demand for wind energy through longterm government support policies creates the basis for local supply of wind capital equipment and services and associated local job creation; policies that put a price on carbon will further help to make wind energy more competitive and increase the overall demand for turbines and equipment. Cross-border investment rather than trade is the dominant mode of the wind industry's global integration. Principal barriers to global integration are nontariff trade barriers and formal and informal barriers that distort firms' investment decisions. These include local content requirements, divergent national industrial standards and licensing demands, and in particular political expectations. Intellectual property accounts for only a very small part of cost in the wind industry, and wind technology is widely available for licensing. Intellectual property rights are correspondingly not a major impediment for market participation. Credible long-term commitments coupled with a reduction or elimination of existing barriers to cross-border trade and investment are necessary to harness the full potential of global integration in reducing wind industry prices and increase worldwide deployment of wind energy.Wind Energy, Renewable Energy Subsidies, Energy Policy, Global Industry Integration, Foreign Direct Investment, Carbon Emissions, Climate Change

Chinese FDI in the United States is taking off: How to maximize its benefits?

China‘s outward foreign direct investment (OFDI) grew rapidly in the past decade, but flows to developed economies have been limited. Now China‘s direct investment flows to the United States are poised to rise substantially. This new trend offers tremendous opportunities for the U. S., provided policymakers take steps to keep the investment environment open and utilize China‘s new interest productively

中国对美国直接投资快速增长：如何获得最大化的收益？

过去十年，中国的对外直接投资快速增长，但对发达经济体的投资十分有限。目前，中国对美国的投资快速增长。如果政策制定者能够采取措施保持开放的投资环境，并有效利用中国新增投资，那么这种新趋势将为美国提供巨大的机遇

Toward a Sunny Future? Global Integration in the Solar PV Industry

Policymakers seem to face a trade-off when designing national trade and investment policies related to clean energy sectors. They have pledged to address climate change and accelerate the large-scale deployment of renewable energy technologies, which would benefit from increased global integration, but they are also tempted to nurture and protect domestic clean technology markets to create green jobs at home and ensure domestic political support for more ambitious climate policies. This paper analyzes the global integration of the solar photovoltaic (PV) sector and looks in detail at the industry’s recent growth patterns, industry cost structure, trade and investment patterns, government support policies and employment generation potential. In order to further stimulate both further growth of the solar industry and local job creation without constructing new trade and investment barriers, we recommend the following: (1) Governments must provide sufficient and predictable long-term support to solar energy deployment. Such long-term frameworks bring investments forward and encourage cost cutting and innovation, so that government support can decrease over time. A price on carbon emissions would provide an additional long-term market signal and likely accelerate this process. (2) Policymakers should focus not on solely the manufacturing jobs in the solar industry, but on the total number of jobs that could possibly be created including those in research, project development, installation, operations and maintenance. (3) Global integration and broader solar PV technology deployment through lower costs can be encouraged by keeping global solar PV markets open. Protectionist policies risk slowing the development of global solar markets and provoking retaliatory actions in other sectors. Lowering existing trade barriers—by abolishing tariffs, reducing non-tariff barriers and harmonizing industry standards—would create a positive policy environment for further global integration.Solar PV, climate change, renewable energy, government support, green protectionism, green jobs, global integration

Toward a Sunny Future? Global Integration in the Solar PV Industry

Policymakers seem to face a trade-off when designing national trade and investment policies related to clean energy sectors. They have pledged to address climate change and accelerate the large-scale deployment of renewable energy technologies, which would benefit from increased global integration, but they are also tempted to nurture and protect domestic clean technology markets to create green jobs at home and ensure domestic political support for more ambitious climate policies. This paper analyzes the global integration of the solar photovoltaic (PV) sector and looks in detail at the industry’s recent growth patterns, industry cost structure, trade and investment patterns, government support policies and employment generation potential. In order to further stimulate both further growth of the solar industry and local job creation without constructing new trade and investment barriers, we recommend the following: (1) Governments must provide sufficient and predictable long-term support to solar energy deployment. Such long-term frameworks bring investments forward and encourage cost cutting and innovation, so that government support can decrease over time. A price on carbon emissions would provide an additional long-term market signal and likely accelerate this process. (2) Policymakers should focus not on solely the manufacturing jobs in the solar industry, but on the total number of jobs that could possibly be created including those in research, project development, installation, operations and maintenance. (3) Global integration and broader solar PV technology deployment through lower costs can be encouraged by keeping global solar PV markets open. Protectionist policies risk slowing the development of global solar markets and provoking retaliatory actions in other sectors. Lowering existing trade barriers—by abolishing tariffs, reducin