A Policy Perspective on Outward Foreign Direct Investment by Chinese State-Owned Enterprises

A growing number of developed country governments in recent years have adopted a hostile attitude towards foreign direct investments undertaken in their markets by state-owned enterprises (SOEs), the latter often based in China. The broad reason for this hostility is the belief that state-owned enterprises pursue non-commercial objectives with resulting damage to host economies. This paper argues that the empirical evidence shows SOEs are increasingly exhibiting market-owned behavior. Furthermore, any adverse consequences of non-commercial behavior are likely to be realized primarily by the SOEs themselves.