Volume 45 (2011) / Issue 5
China, GMS, Trade, Investment JEL Classification: F13, F14, F15
The objective of this article is to understand why the Chinese firms are investing outside China and how China stands to gain from this decision. For our analysis, we consider the case of China's trade and investment relation in the Greater Mekong Subregion (GMS). We find that a reason for the Chinese firms to invest in the GMS has to do with higher domestic input cost as well as to evade protectionist measures in the United States and the European Union (EU). As to how China stands to gain, it is largely explained through elements of complementarities in trading and investment relationship.
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