Evaluation of outward foreign direct investment environment in China

This paper explores the importance of outward foreign direct investment (OFDI) of Chinese firms for the Chinese economy. Using the Chinese Bureau of Statistics dataset from 2008 to 2020 and applying the Principal Component Analysis (PCA) and Data Envelopment Analysis (DEA) methodology, we evaluate China's OFDI environment. Firstly, we determine the main inputs of Chinese OFDI and run a PCA to reduce their dimension. Secondly, when employing the DEA method, we take the year as the decision-making unit which allows us to evaluate the trend of China's OFDI efficiency from 2008 to 2020. Finally, some policy implications are raised pointing to the fact that to efficiently promote OFDI, China needs to adjust its policies and resource allocations. This can be achieved by strengthening its ability to transform scientific research results towards the enterprises' competitive advantages. Furthermore, the Chinese government should enhance its policies to assist and guide Chinese companies to invest abroad.