Chinese FDI in the Oil Sector : Can they be explained by the prevalent theory on FDI?

Abstract: China has experienced a phenomenal growth during the last years. With this economic development comes a great need for energy. Energy to fuel the domestic production. As the domestic resources in China have shown to be insufficient, one way to get the energy demanded is to go onto the international market. China has, thus, started undertaking FDI in oil to be able to feed the domestic needs. In this thesis we will discuss these investments and investigate if prevalent theories on FDI can explain the FDI that have taken place. Our conclusion is that the FDI undertaken has been resource-seeking investment. Since the Chinese oil companies are state-owned and regulated so that they can not act as profitmaximizing firms, our thesis will show that the Chinese FDI in the oil sector therefore only partly can be explained by the theories on FDI.