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Article

The Misunderstanding of China’s Investment, and a Clarification: “Faustian Bargain” or “Good Bargain”? On the OFDI Data of Central and Eastern Europe

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School of Government, Shenzhen University, Shenzhen 215123, China
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Institute on the Development of Southern Jiangsu, Collaborative Innovation Center for New-Type Urbanization and Social Governance of Jiangsu Province, Soochow University, Suzhou 215123, China
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Metropolitan College, Boston University, Boston, MA 02215, USA
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Department of Government, University of Texas at Austin, Austin, TX 78703, USA
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Zhejiang Business College, Hangzhou 310000, China
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Institute of Economic Sciences, Hungarian University of Agriculture and Life Sciences, 2100 Gödöllő, Hungary
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Faculty of Economics and Business, University of Debrecen, 4032 Debrecen, Hungary
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College of Business and Economics, University of Johannesburg, Johannesburg 2006, South Africa
*
Authors to whom correspondence should be addressed.
Academic Editor: Donato Morea
Sustainability 2021, 13(18), 10281; https://doi.org/10.3390/su131810281
Received: 3 August 2021 / Revised: 8 September 2021 / Accepted: 10 September 2021 / Published: 14 September 2021
The close development of the economic relations between China and Central and Eastern Europe (CEE) since 2012 has triggered the European Union’s criticism of China’s foreign policy towards Eastern European countries. The European Union believes that China’s investment growth has led to a governance crisis in CEE countries. Based on the global governance indicators of the World Bank and the outward foreign direct investment (OFDI) data of the Ministry of Commerce of China, this paper conducts a test using the panel data model and the regression discontinuity method. An imbalanced panel dataset is adopted, covering 16 CEE countries from 2000 to 2018. The empirical research results indicate that, representing a small proportion of the investment inflows to CEE countries, China is not yet able to exert a domination effect on the region, and China’s economic power is far less than the European Union’s regulatory influence. Furthermore, China’s share of the OFDI in CEE has a U-shaped effect on the regulatory quality of host countries, and the two have a mutually causal relationship. Specifically, the impact on the host country’s regulatory quality is first manifested in the Shanghai effect, and when China’s share reaches a certain level, it is manifested in the California effect. The U-shaped effect is associated with the strategic factors of CEE countries and China’s positive contribution to good global governance. View Full-Text
Keywords: governance quality; China’s OFDI; 16 + 1 cooperation framework; Central and Eastern Europe; the Belt and Road Initiative governance quality; China’s OFDI; 16 + 1 cooperation framework; Central and Eastern Europe; the Belt and Road Initiative
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MDPI and ACS Style

Duan, C.; Zhou, Y.; Shen, D.; Lin, S.; Gong, W.; Popp, J.; Oláh, J. The Misunderstanding of China’s Investment, and a Clarification: “Faustian Bargain” or “Good Bargain”? On the OFDI Data of Central and Eastern Europe. Sustainability 2021, 13, 10281. https://doi.org/10.3390/su131810281

AMA Style

Duan C, Zhou Y, Shen D, Lin S, Gong W, Popp J, Oláh J. The Misunderstanding of China’s Investment, and a Clarification: “Faustian Bargain” or “Good Bargain”? On the OFDI Data of Central and Eastern Europe. Sustainability. 2021; 13(18):10281. https://doi.org/10.3390/su131810281

Chicago/Turabian Style

Duan, Cheche, Yicheng Zhou, Dehong Shen, Shengqiao Lin, Wei Gong, József Popp, and Judit Oláh. 2021. "The Misunderstanding of China’s Investment, and a Clarification: “Faustian Bargain” or “Good Bargain”? On the OFDI Data of Central and Eastern Europe" Sustainability 13, no. 18: 10281. https://doi.org/10.3390/su131810281

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