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Top1. Introduction
Outward FDI (OFDI) is an effective way for developing countries to engage in global cooperation, acquire advanced technologies, and undergo industrial transformation (Jiang et al., 2020). China, the world's largest developing country, has experienced sizeable growth in OFDI since the implementation of the “Go Global” strategy at the turn of new millennium, becoming a major source of OFDI worldwide. According to the Statistical Bulletin of China’s Outward Foreign Direct Investment, China’s nonfinancial OFDI has increased approximately 55-fold in 20 years, from $2.7 billion in 2002 to $152.02 billion in 2021, making it the second-largest global outbound investor1. This signifies the historic transition of Chinese corporations from global manufacturers to global investors. However, the rapid development of the digital economy, particularly in digital finance, has presented both opportunities and challenges for Chinese enterprises expanding globally (Feng & Chen, 2022). While digital technologies open up new avenues for Chinese enterprises to participate in global markets, they also present challenges, such as lack of innovation capacity and modest technological advantages when compared to developed counterparts (Huang and Khan, 2022). This divide is becoming increasingly apparent, with only 17% of enterprises achieving high digital transformation by 20222. This gap limits Chinese enterprises' long-term ability to enhance their global competitiveness, increase productivity, and maximize the benefits of OFDI (Deng et al., 2022). Therefore, bridging the digital divide is critical for Chinese enterprises to remail competitive in the global marketplace. This can be achieved by increasing their capacity for innovation, technological advancements, and operational efficiency, allowing them to maintain competitiveness, increase productivity, and maximize the benefits of their OFDI (Jiang et al., 2023).
The Chinese government has been actively encouraging Chinese enterprises to expand internationally in recent years, and has offered them strong support for their overseas endeavors. This support has manifested itself in a variety of policies aimed at encouraging and facilitating international investment, particularly in the digital economy (Li et al., 2023). A significant policy example was the Guidelines for Foreign Investment Cooperation in Digital Economy, which were published by the Chinese Ministry of Commerce in 2021. These guidelines underscore the significance of actively participating in the global industry chain of digital economy, and optimizing the “Go Global” strategic layout, as well as emphasizing the importance of digital technology in promoting firms’ digital transformation and establishing globally competitive digital enterprises (Ge et al., 2022). In this light, studying the relationship between digital finance and China's OFDI can provide valuable insights into the nuanced mechanisms through which digital finance has influenced and shaped the patterns of outbound investment Chinese enterprises. This would help policymakers, researchers, and market participants understand the dynamics of China’s international investment landscape. It will also aid policymakers in developing supportive policies and initiatives to encourage and facilitate digitalization among businesses, specifically targeting those with low digitization levels.