This paper examines the impact of both China’s bilateral investment treaties (BITs) and double tax treaties (DTTs) simultaneously on China’s bilateral foreign direct investment (FDI) inflows and outflows. Using China’s bilateral FDI flow data from 1985 to 2010, the authors find that the cumulative number of BITs China signed has a positive (although not always statistically significant), but minor, impact on both China’s FDI inflows and outflows.

Using variables and different data methods, the authors find the following: the effect of a dummy BIT using dyadic data is always significant and positive for China’s FDI inflows, while negative but not always significant for China’s FDI outflows; the cumulative number of DTTs tends to promote China’s FDI inflows and outflows in most equations with weighted cumulative BITs; but tax treaty dummies do not reveal any robust effect on FDI flow. Generally, BITs and DTTs are more inclined to affect China’s FDI inflows than to affect China’s FDI outflows.

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CIGI Papers present in-depth analysis and discussion on governance-related subjects. They include policy papers that present CIGI experts' positions or contributions to policy debates, and background papers that contain research findings, insights and data that contribute to the development of policy positions.
  • Hejing Chen worked as a post-doctoral fellow in the Department of Economics at the University of Western University from September 2010 to June 2014. She holds a Ph.D. in economics from Xiamen University and her research interests are international trade in services, China’s economic policies and international finance.

  • Chunding Li is a research fellow and deputy director of the international trade department at the Institute of World Economics and Politics, Chinese Academy of Social Sciences. His main research fields are international trade disputes, regional trade agreements, and policy modelling and simulation.