A “Good” Country without Democracy: Can China's Outward FDI buy a Positive State Image Overseas?

This study examines the effects of China's outward foreign direct investment (FDI) on buying its state image abroad. We argue that regime survival has motivated China to use FDI to improve its state image and induce the world to accept China as a “good” country without democracy. Our analysis shows that while world public opinion becomes more favorable to China when its FDI share increases, even democratic countries remain less favorable toward this growing power. However, when China's FDI share crosses a higher threshold, democratic countries' unfavorable view toward China is compromised and the significant difference in favorability between democratic and nondemocratic countries is diminishing. China's FDI share has no significant effect on improving its state image in the Asia Pacific region, in particular—probably due to the memory of past wars with China and China's aggressive geopolitical strategy that focuses more on hard power competition. Our empirical results are robust in terms of their consistency with the governments' UN voting similarity with China. Related Articles Åberg, John H. S., and Derick Becker. 2020. “China as Exemplar: Justin Lin, New Structural Economics, and the Unorthodox Orthodoxy of the China Model.” Politics & Policy 48 (5): 815‐835. https://doi.org/10.1111/polp.12376 Asongu, Simplice A. 2016. “Sino‐African Relations: A Review and Reconciliation of Dominant Schools of Thought.” Politics & Policy 44 (2): 351‐383. https://doi.org/10.1111/polp.12152 Davis, G. Doug. 2011. “Regional Trade Agreements and Foreign Direct Investment.” Politics & Policy 39 (3): 401‐419. https://doi.org/10.1111/j.1747‐1346.2011.00296.x