The New International Economic Environment and Policy Responses for Outward Direct Investment

This chapter analyzes the evolving international economic environment and its implications for China’s outward direct investment (ODI). It argues that expanding ODI has become an inevitable strategic choice for Chinese enterprises in response to domestic economic pressures as well as external challenges such as supply chain restructuring, rising protectionism, and geopolitical uncertainty. The chapter highlights a structural shift in China’s ODI model from asset-seeking to asset-utilization, with greenfield investment increasingly becoming the dominant mode due to its advantages in long-term strategic planning and local integration. Developing countries are identified as key destinations, offering cost advantages, market potential, and opportunities for industrial upgrading. At the same time, the chapter points out several major challenges faced by Chinese enterprises, including tightening financial constraints, relatively weak investment performance, and increasing political and institutional risks in host countries. Drawing on international experience, particularly from the United States and Japan, the chapter proposes policy responses such as strengthening financial support systems, enhancing the role of overseas chambers of commerce, improving risk prevention mechanisms, and promoting coordinated and sustainable investment strategies.