Is China¡¯s Outward Investment in Oil a Global Security Concern?

The motivations prompting China¡¯s dramatic increase in outward foreign direct investment (OFDI) are not always clear, especially regarding OFDI by state-owned enterprises (SOEs) in energy and natural resources. First, both commercial and governmental interests are intertwined, although not necessarily in lock-step. Chinese SOEs listed in the West may worry about the reputational risks to their global corporate citizenship, while government stakeholders may instead focus on diplomatic international relations. Second, subsidies for oil investments may be viewed as serving Chinese national interests and threatening the national security of the host countries. Whether China¡¯s OFDI will benefit or harm global energy security, economic development and diplomatic relations is still hotly contested. This article discusses China¡¯s outward investment in oil with a global security concern.