Chinese Overseas Economic Zones and Chinese Greenfield FDI: An Investigation of Their Impacts on Lowering Liabilities of Foreignness and Promoting Greenfield FDI in Chinese MNEs

Abstract

Chinese Overseas Economic Zones (COEZs) are used by the Chinese state and Chinese multinational enterprises (MNEs) to facilitate overseas production and entry, yet their geography, investment effects, and buffering role remain insufficiently understood. Using a harmonised COEZ roster over 2003-2018, this thesis links three empirical studies. Study 1 estimates panel logit models of COEZ presence for 167 host economies and shows that market size consistently predicts zone presence, while governance conditions, political instability, and cultural distance shape placement in tier-specific ways. Study 2 applies staggered difference-in-differences with event-study diagnostics and cohort-time estimators in a 165-country panel (2,593 country-years), finding higher Chinese greenfield FDI after COEZ establishment and stronger effects in BRI-active years. Study 3 estimates interaction-based two-way fixed-effects models over a project-year panel spanning 132 hosts and reveals tier asymmetry: national-tier zones attenuate (and sometimes reverse) the institutional-distance penalty, whereas provincial-tier zones in pre-national periods are associated with a steeper distance gradient. Official finance from China is negative in non-COEZ years but less so under COEZ status; zones do not robustly moderate the exports-investment relationship.